Kraft may make $17.6 bn Cadbury hostile bid

Kraft Foods Inc, which this month proposed to buy Cadbury Plc, is poised to make an 11 billion-pound ($17.6 billion) hostile bid for the chocolate maker, the Observer reported, citing unidentified “City sources”.

Kraft may bid as much as 850 pence a share and plans to pay half in cash with the remainder in new Kraft shares, the newspaper said. Citigroup Inc, Deutsche Bank AG and Lazard Ltd are organising the financing, according to the report.

Meanwhile, Cadbury Plc said it still opposes Kraft Foods Inc’s 9.9 billion-pound ($15.9 billion) takeover approach and said reports that Chief Executive Officer Todd Stitzer had softened his stance were “misconstrued.”

Bank of America-Merrill Lynch staff, who organised a conference where Stitzer spoke September 22, said two days ago that Cadbury’s chief indicated he may consider a higher bid from Kraft. An earlier Reuters report, which Merrill subsequently denied, said Stitzer had discussed a fair value for the London-based maker of Dairy Milk chocolate.

Stitzer “was asked a question about the strategic merit” of Kraft’s offer at that conference, Cadbury said in a statement this afternoon. “Commentary on this issue has misconstrued Stitzer’s remarks to imply a softening of his view regarding a combination between Kraft and Cadbury. For the avoidance of doubt, Stitzer does not believe that Kraft’s proposal makes strategic or financial sense, and his comments should not be interpreted in any other way.: A Merrill spokeswoman declined to comment. Kraft spokeswoman Lisa Gibbons said the company had no comment.

Cadbury spokesman Trevor Datson said earlier that the candy maker “proactively” contacted the UK Takeover Panel, the independent regulator that ensures offers comply with UK rules, after the reports of Stitzer’s remarks.