Kraft made it...Finally it managed to get Cadburys commitment to sell

As they say the deal is no...and with this, Kraft have managed to get Cadbury's Board of Directors agreement to sell the company. This doesn't come for free to Kraft that has agreed to pay 840p per share which brings the total deal price of £11.6bn in a deal that involves both a cash and share element.

This is the second offer that Kraft made is much higher than the 745p which Kraft had made last September and that Cadbury had totally refused. The market was also expecting a move from either Ferrero or Hersheys as Cadbury preferred to be takenover in a friendly way (rather then in a hostile deal as Kraft tried to do in its initial approach) however both companies took to long to come up with an offer.

This deal did not go down really well with the famous US investor Warren Buffett who said that he had a lot of doubts on the deal. Kraft investors will not have the chance to vote on the deal, which involves the Kraft issuing 265m new shares, equivalent to about 18 per cent of its existing share capital, because that is below the 20 per cent level at which shareholder approval is required.

Mr Buffett, who holds more than 9 per cent of Kraft, said the company was worth more than its current stock price, which fell by 2 per cent at $28.72 in early Wall Street trading on Wednesday and hence the use of stock payment by Kraft make Cadbury's purchase a “very expensive deal”.

What do you think about the deal? Was it an ideal one or could Cadbury have made a better deal by waiting a bit more?

Aer Lingus in a stuggle to save itself against another takeover attempt

Aer Lingus has started sounding the takeover alarm. The new head of the airline has warned the company risks being taken over by its larger rival Ryanair unless all employees agree to his restructuring plans for sweeping cost cuts.

The issue is that if Aer Lingus isn't capable to control it's own costs and plan ahead , then the likelihood of being taken over and hence remain non independent is more likely to occur. Aer Lingus biggest rival is Ryanair, which has already placed two bids for Aer Lingus over the past years. Ryanair first bid €2.80 a share for Aer Lingus in October 2006, valuing the company at €1.48bn. That takeover was blocked by the European Commission on competition grounds. A second bid worth half that of the first in December last year also failed after the Irish government, which has a 25 per cent stake in Aer Lingus, said it undervalued the airline.

According to Irish takeover laws, Ryanair has the opportunity of making another takeover bid in late January...it is believed that the failure to reach an agreement with unions will increase the likelihood of the bid. Ryanair who already control just over 29 per cent of Aer Lingus is seeking to increase it shareholding to take full control.

The new chief executive officer of Aer Lingus who joined just a few months ago has devised plans and started talks to cut job and pays in order to save about €97m, however the Airline is still struggling in the negotiations with the pilots.

Aer Lingus this year reported a pre-tax loss of €119.7m and analysts say a failure to cut costs could jeopardise its independence.

Everybody wants Cadbury

Cadbury has become very attractive, not only for it chocolate but for all it's business. After the hostile takeover attempts by Kraft Foods' all other major confectionery brands are starting to see whether they can produce a counter offer to takeover the British Brand.

One of these companies is Hershey which is controlled by a charitable trust. The Trust has encouraged the management to consider making a counter offer for Cadbury of around $17bn in such a way to topple the $16.2bn offer made by Kraft Foods.

However the bid is not imminent as there are a lot of things that Hershey has to analyse...one of these is to weigh the effect that such a huge transaction (that would include a combination of stock, debt and a multi billion-dollar contribution from deep-pocketed investors such as pension funds) would effect the overall viability of the company. Cadbury is larger than Hershey so the latter must be very careful not to end up like Porsche, who tried to take over Volkswagen but ended up being takeover by the same brand.

It is also thought that Hershey is seeking the cooperation of the Italy brand Ferrero so as to form a consortium that would bid for the British Brand. However, although Ferrero has expressed it's interest for Cadbury to the UK authorities, it is sill unclear whether Ferrero is ready to take this large step.

Hershey has an advantage over Kraft Foods as it has been working closely with Cadbury for a number of years by distributing the British Brand in the US. Hershey may be a welcome alternative in what has become an increasingly contentious standoff between Cadbury’s top executives and Kraft.

How would this end up? Will Kraft manage to takeover the British Brand or will Cadbury manage to hold back and defend itself from any takeover bid?