Topic: Growth Stocks

The Wall Street Stock Forecaster Hotline – Friday, November 13, 2009

Article Excerpt

KRAFT FOODS INC., $26.91, New York symbol KFT, has made a formal offer to buy U.K.-based Cadbury plc (New York symbol CBY). Cadbury is a leading maker of confectioneries, including chocolate, candy and gum. Kraft is offering roughly $16.5 billion in cash and stock. That’s equal to 42% of its $39.7-billion market cap. Cadbury has rejected the takeover, and its shares are trading slightly above the value of Kraft’s offer. That suggests investors are expecting a higher bid from Kraft or another company. Under U.K. takeover rules, Kraft has 28 days to send its official offer to Cadbury shareholders. After that, the offer will remain open for 60 days. This takeover has appeal. The combined company would have $50 billion in annual revenue, compared to $42 billion for Kraft alone. Adding Cadbury would also help Kraft increase its sales to developing countries. Kraft gets just 20% of its sales from these markets, compared to 40% for Cadbury. Moreover, chocolates and candies…