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Kraft Q3 and Cadbury
Kraft’s slightly disappointing results yesterday, and the subsequent 3% decline in the share price does not materially affect the value of its proposed hostile offer for Cadbury: the offer is now worth 721p, 1.4% less than it did at the time it was made.
The fact that some in the media made much of it implies either:
- they hoped for much better results, or
- financial journalists are clueless,
or (most likely) both.
Cadbury’s share price is well above the level it was before Kraft made its offer. It was trading at 777p at yesterdays close, which suggests that the market expects Kraft to make a significantly better offer rather than walk away. The premium over what Cadbury would be worth without the offer suggests that shareholders should hope for a better offer.
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