Cadbury Union Again Urges Shareholders To Reject Kraft Offer

Cadbury PLC (CBY) shareholders were urged Friday by its workers' trade union to reject Kraft Foods Inc.'s (KFT) GBP9.9 billion hostile takeover offer, on grounds the debt the U.S. food giant needed for the acquisition would destabilize the U.K. confectioner and hit future returns.

"Cadbury has a great record of generating good returns for shareholders and that success has also meant good, secure work for thousands. We appeal to shareholders not to put this at risk by entertaining this Kraft bid," Unite, the U.K.'s largest labor union, said in a statement.

"This offer is not in the best interests of either shareholders or the U.K., and certainly not the employees. It would saddle the company with excessive debt, compromise investment and certainly mean instability with attacks on jobs, wages and conditions," it added.

Unite's appeal direct to shareholders comes ahead of a formal defense document to be published Monday by Cadbury in which the candy maker is expected to highlight its genuine value, highlighting the group's ability to grow organic sales and the success of its "Vision Into Action" efficiency drive.

The company will also publish its scheduled trading update which analysts say will give further confirmation of the volume improvements already seen in the first two quarters of the year.

Unite, which will be attaching its own defense to that of Cadbury's, is also approaching the U.K. government and E.U. regulators as part of its campaign to ward off Kraft's bid which has already fallen in value since it was made and was worth just 723 pence as of Dec. 11, compared with 745 pence a share when Kraft made its offer Nov. 9.

The U.S. company is offering Cadbury shareholders 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share. The cash and share offer originally valued Cadbury at GBP10.2 billion, but a subsequent fall in Kraft's share price and the U.S. dollar has since weakened the value of the bid.

Kraft, which is being advised by Lazard (LAZ), has rounded up a raft of banks to finance its bid. It has secured a GBP5.5 billion bridge loan from a group of nine banks led by Citigroup Inc. (C), Deutsche Bank AG (DB) and HSBC Holdings PLC (HBC) and including BNP Paribas SA (BNP.FR), Barclays Capital, Royal Bank of Scotland Group PLC (RBS) as well as Credit Suisse (CS), Societe Generale SA (SCGLY) and Banco Bilbao Vizcaya Argentaria SA (BBV).

Unite's strong and vocal oppostion to Kraft's bid comes on top of recent comments by the U.K.'s top business minister, Peter Mandelson, that any bidder for the British confectioner could face government opposition if it is seen as trying to make a "quick buck" on the company.

In the light of these warnings Cadbury, under its American chief executive Todd Stitzer, won't need to play the nationalistic card itself Monday and can instead use dry figures to support a robust defense to the bid, which it has repeatedly called "derisory."

-By Marietta Cauchi, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@dowjones.com

(Michael Carolan

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