Kraft makes an offer Cadbury can't refuse

NORTHFIELD, Ill. Things just got sweeter for Kraft as its offer to purchase U.K.-based Cadbury for 11.7 billion pounds (U.S. $19 billion) was accepted Tuesday.

The deal marks the end of an era, as the British chocolate maker's nearly 200-year independence draws to a close.

"We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world," said Cadbury chairman Roger Carr. "We will now work with the Kraft Foods' management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees."

The final offer represents 13 times Cadbury's underlying 2009 EBITDA, Kraft said, and includes both cash and stock. Under the terms of the proposal, Kraft will pay 840 pence ($13.70) for each Cadbury share, while Cadbury will pay out a special dividend of 10 pence per share. Although the deal was unanimously approved by Cadbury's board, the final offer did not need the approval of Kraft shareholders.

"We have great respect for Cadbury's brands, heritage and people. We believe they will thrive as part of Kraft Foods. This recommended offer represents a compelling opportunity for Cadbury shareholders, providing both immediate value certainty and upside potential in the combined company. For Kraft Foods shareholders it transforms the portfolio, accelerates long-term growth and delivers highly attractive returns, while maintaining financial discipline," said Kraft chairman and CEO Irene Rosenfeld.

Kraft has sought to purchase the confectionary since November 2009, after launching a $16.3 billion bid. The initial offer, Cadbury chairman Roger Carr said, undermined the value of the company. There also were rumors that other confectionary kings, namely Hershey and Ferrero, were seeking to takeover Cadbury, but would split the business.

In December, Kraft reached out a second time with a $16.5 billion bid. In response, Cadbury issued a defence document, which noted that the company raised its outlook and future goals as an independent company.