September 8th, 2009
Packaged foods giant Kraft Foods Inc. (KFT) made a $16.7 billion bid to acquire confection maker Cadbury plc (CBY) on Monday, but the offer was quickly rejected as “undervaluing” the British chocolate producer.
However, Kraft said that it remains committed to buying Cadbury. “Kraft Foods is committed to working toward a recommended transaction and to maintaining a constructive dialogue, and is announcing this proposal as a means to encourage and further that process,” said the company in a statement.
Cadbury said that “The Board is confident in Cadbury’s standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope.” It also said that Kraft’s offer “fundamentally undervalues the group and its prospects.”
Kraft shares fell $1.61, or -5.7%, while Cadbury shares rose $14.86, or +40%, in morning trading Tuesday.
The Bottom Line
We have been recommending shares of KFT since May 5, when the stock was trading at $24.26. The company has a dividend yield of 4.13%, based on Friday’s closing stock price of $28.10. We continue to like the shares despite this morning’s price dip.
Kraft Foods Inc. (KFT) is a “recommended”, holding a Dividend.com DARS™ Rating of 3.5 out of 5 stars.
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