Since the launch of the initial bid, the two companies have warred over their respective business credentials and the value of the Cadbury business. During an investor conference Cadbury CEO Todd Stitzer even talked out the danger of diluting its model of principled capitalism.
Meanwhile Kraft has been defiant over its valuation of Cadbury, insisting that the company is only worth what someone else is willing to pay.
Hostile bid price
Now the Observer newspaper has reported that Kraft plans to go against the Cadbury management and mount an £11bn hostile bid.
Furthermore, the UK paper said the Takeover Panel is preparing this week to impose a deadline ordering Kraft to make a bid by a certain time or walk away for at least six months.
In this context, city sources told the Observer that Kraft could bid 800p a share which could rise to 850p in the run up to the reported 60-day time limit to be set by the panel.
This morning Kraft refused to comment on the story calling it “market speculation”.
Some analysts considered the initial bid for Cadbury too low and suggested that other suitors may appear as the bidding battle heats up, pushing the final price up as far as 900p per share.
“The ultimate take out price depends on whether a second bidder comes into play,” Panmure Gordon analyst Graham Jones told FoodNavigator.com at the time. “£8 feels like a right price, but if it becomes competitive Cadbury could even expect £9.”
The Observer said yesterday that the presentation of a hostile bid could encourage another bidder to come to the table. An alliance between Hershey and Nestle is viewed as the most credible scenario, because they have the financial muscle but are unlikely to go alone for competition reasons.