DBRS Places Cadbury Under Review with Developing Implications

DBRS has today placed the ratings of Cadbury Holdings Limited and its affiliates (Cadbury or the Company) Under Review with Developing Implications following the formal unsolicited takeover bid by Kraft Foods Inc. (Kraft) for 100% of the outstanding shares of Cadbury PLC. The proposed GBP 9.8 billion ($16.3 billion) offer by Kraft would be funded with a combination of shares and cash. The board of directors of Cadbury has rejected the offer as inadequate. The Under Review with Developing Implications status reflects the uncertainty regarding the outcome of the takeover bid and, if successful, the ultimate capital structure and financial policies of the combined entity.

Kraft is offering 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share – the same terms as the offer to Cadbury shareholders announced by Kraft on September 7, 2009 (which valued Cadbury at roughly $16.7 billion). Kraft has indicated that the merger would increase the combined company’s ability to better compete with its larger global competitors through scale and believes that there is the potential for meaningful synergies ($625 million (pre-tax) annually at the end of the third year following completion, excluding one-time costs of roughly $1.2 billion).

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Consumer Products, which can be found on our website under Methodologies.

This is a Corporate rating.