DBRS Maintains Cadbury at Under Review - Developing

DBRS has today maintained the ratings of Cadbury Holdings Limited and its affiliates (Cadbury or the Company) Under Review with Developing Implications following the revised takeover offer by Kraft Foods Inc. (Kraft) for 100% of the outstanding shares of Cadbury PLC. Cadbury’s board of directors has unanimously accepted Kraft’s latest offer, which values the Company at GBP 11.9 billion (roughly $19.4 billion) and includes an increased cash component. The Under Review-Developing status continues to reflect the uncertainty regarding the outcome of the bid and, if successful, the ultimate capital structure and financial policies of the combined entity.

Kraft has now agreed to pay 840 pence per share of Cadbury and a ten pence dividend. The new offer includes 500 pence in cash and 0.1874 new Kraft shares for each Cadbury share – an increase from the previous November 2009 offer of 300 pence in cash and 0.2589 new Kraft shares (which valued the Company at roughly $16.7 billion). In addition to the higher price, the revised offer comprises roughly 60% cash, as opposed to 40% previously. The takeover offer requires Cadbury shareholder approval by February 2, 2010, and includes a GBP 117.7 million break-up fee. As part of the new offer, Kraft has reduced the level of acceptances from Cadbury shareholders from 90% to 50% plus one share.

Kraft has stated that the merger would increase the combined company’s ability to better compete with its larger global peers through scale and that it believes that there is potential for meaningful synergies. The offer by Kraft is considered final, but could be increased if there is a third-party offer for Cadbury.

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.