Kraft: Will a bid for Cadbury fall short?
Kraft, the big U.S. food conglomerate, this week launched a hostile takeover bid for British candy maker Cadbury, said Andrew Ross Sorkin in The New York Times. Cadbury spurned the offer, saying that the proposed $16.5 billion price “substantially undervalues its future prospects.” Kraft first approached Cadbury in September, indicating it would pay $5.04 in cash and about a quarter share of Kraft stock for each Cadbury share. Cadbury’s board was not interested. Kraft’s new bid leaves those terms unchanged, but because Kraft’s share price has slipped since September, the offer is actually worth less than the $16.8 billion price that Kraft originally contemplated.
At first blush, the deal “sounds as if it’s designed for failure,” said The Economist. Cadbury, which practices a form of “principled capitalism” in line with its founders’ “provincial Quaker roots,” would fit awkwardly with hard-charging Kraft. But with their strong followings in different parts of the world, Cadbury and Kraft have a chance “to establish a global empire of taste.” It’s an opportunity that could benefit shareholders of both companies.
Currencies: Dollar sinks, gold soars
“Worries about the fast-falling dollar are sending gold prices to record highs,” said Patrice Hill in The Washington Times. Gold closed at $1,111.70 per ounce earlier this week, while the dollar traded near its 15-month lows against the yen and the euro. Analysts say that as the economy recovers, investors are dumping supersafe Treasury bonds and the dollar, and buying “investments that grow with the economy, like stocks and commodities.” That shift this week propelled the stock market to new highs for the year.
Autos: GM to keep Opel after all
In a startling about-face, General Motors said last week that it would keep its European Opel division, said Daniel Schafer in the Financial Times. Abandoning plans to sell Opel to Canada’s Magna and Russia’s Sberbank, GM said it would “start restructuring its European unit.” The decision, which “reflects improved business confidence in the car sector,” is an “embarrassment for the German government,” which strongly backed the Magna deal, and a setback to Russia’s hopes to “overhaul its gravely damaged auto industry.”
Antitrust: Cuomo takes aim at Intel
New York Attorney General Andrew Cuomo has filed an antitrust suit on behalf of New York consumers against Intel, accusing the chip maker of bribing and bullying computer makers to keep them loyal, said Brandon Bailey in the San Jose Mercury-News. The suit charges Intel with “illegally pressuring” Dell Computer, Hewlett-Packard, and others to shun microchips made by Advanced Micro Devices. Intel, says Cuomo, paid Dell $2 billion not to use AMD chips, prompting Intel CEO Paul Otellini to call Dell “the best friend money can buy.” Intel denies any wrongdoing.
Oil: Exxon wins a piece of the Iraqi pie
For the first time since the start of the Iraq war, a U.S. oil company has been awarded drilling rights in Iraq, said Gina Chon in The Wall Street Journal. Exxon leads a consortium that has been awarded a contract “to boost production at the already-pumping” West Qurna-1 oil field in southern Iraq. The Iraqi government hopes the deal will help it boost the country’s overall oil production to 7 million barrels a day by 2015, up from today’s 2.5-million-barrel output.