Kraft and Cadbury Reach Merger Deal

BY Carolyn O'Hara  January 19, 2010 at 11:27 AM EST

After several months of often contentious talks, Cadbury has accepted Kraft’s takeover offer, creating the world’s biggest confectioner in a deal valued around $19.4 billion.

Cadbury had strongly resisted any such deal for months; at one point in November, Kraft went directly to Cadbury shareholders with terms, which the shareholders ultimately rejected.

Tuesday, the 186-year-old candy company accepted Kraft’s sweetened offer of 500 pence cash and 0.1874 new Kraft shares for every Cadbury share. All in all, that’s about $13.40 per Cadbury share. Kraft’s new offer is 60 percent cash, up from 40 percent, reflecting the earlier demands of shareholders, who now have until February 2 to accept the deal.

Kraft’s acquisition of Cadbury — the combined company would have revenues last year of $50 billion — gives it access to growing markets in Asia and Latin America, while Cadbury cited the benefits of a more efficient supply chain for its products.

In other business news, Citigroup reported a $1.6 billion loss for the year.

The bank lost $7.6 billion in the fourth quarter, despite profits in the past three quarters. The bulk of the losses came in connection to continued suffering in the bank’s domestic mortgage and credit units and the repayment of government TARP funds.

More earnings reports are on tap this week: Tomorrow, Bank of America*, Wells Fargo, U.S. Bancorp, and Morgan Stanley release their earnings. On Thursday, Morgan Stanley releases its reports.

On Paul Solman’s Making Sen$e page, a special Web-only video today showcases Harvard economist Richard Freeman mincing no words when discussing his thoughts on Wall Street’s current trajectory.

*Bank of America is a NewsHour underwriter.