Big Business Is Back: Kraft Makes Hostile Bid For Cadbury

Big is back, or so we hear. A good illustration of this is the bid by North America's biggest food group, Kraft, for the world's second biggest confectionery group, Cadbury. Cadbury has rejected Kraft's US$16.7bn bid. The valuation implied a 31% premium to last week's closing price. The fact that the firm's share price surged 30% shortly after the proposal was announced suggests that the majority of investors believe that a deal could eventually be done. After this extent of share price appreciation, the board is likely to come under pressure from investors to do a deal.

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