Cadbury rejects an unsolicited takeover offer from Kraft Foods.

Cadbury PLC has rejected a £10.2 billion offer from Kraft Foods to combine the two businesses and create a “global powerhouse in snacks, confectionery and quick meals.”

Kraft Foods, which manufactures some of the world’s most famous brands including Oreo, Milka, Maxwell House coffee and Philadelphia, issued an unsolicited offer to Cadbury, which values the chocolatier at 745 pence per share, or £10.2bn.

Kraft Foods, the world’s second-largest food company, has a strong history of successfully integrating strategic business combinations, such as the 2007 acquisition of LU cookies and Nabisco – one of Kraft’s billion-dollar earners in 2000.

Kraft said that the argument for a combined company is overwhelming. It would create a $50bn global powerhouse, with strong geographic diversity and proposed annual cost savings of at least $625 million.

Irene B. Rosenfeld, Chairman and CEO of Kraft Foods, said: “This proposed combination is about growth. We are eager to build upon Cadbury’s iconic brands and strong British heritage through increased investment and innovation. We have great respect and admiration for Cadbury, its employees, its leadership and its proud heritage.”

Ms Rosenfeld explained the company’s intentions for the proposed combined business: “Our current plans contemplate that the UK would be a net beneficiary in terms of jobs. For example, we believe we would be in a position to continue to operate the Somerdale facility, which is currently planned to be closed, and to invest in Bournville, thereby preserving UK manufacturing jobs.”

However, Cadbury issued a statement in response to the proposal stating that due to its strong brand tradition and unique business “the Board is confident in Cadbury’s standalone strategy.” It also said that Kraft’s offer “fundamentally undervalues the group and its prospects.”

More than 30 Cadbury staff protested in July in a row over the 0.5% pay rise they were being offered instead of the promised 2% and according to Unite, last week (2 September) staff have voted in favour of further strike action.