Cadbury has rejected the bid but Kraft said it was committed to working toward a recommended transaction and to maintaining a constructive dialogue

Stocks in Europe rose with food companies among the top performers after Cadbury received and rejected a takeover offer from Kraft Foods. Cadbury shares shot up 36% to 774 pence after Kraft Foods Inc. said it has made a cash-and-stock offer of 10.2 billion pounds (US$16.7bn), or 745 pence a share, for the UK confectioner.

The proposal consists of 300 pence in cash and 0.2589 new Kraft share per Cadbury share. It represents a 31% premium over Cadbury’s closing price on Sept. 4. Cadbury has rejected the bid but Kraft said it was committed to working toward a recommended transaction and to maintaining a constructive dialogue.

Deutsche Telekom shares firmed up by 2.1% amid news that Vodafone Group of the UK and Spain’s Telefonica have each tabled conditional offers of about 3.5 billion pounds to buy T-Mobile UK from the German telecom giant, the Sunday Times reported. Vodafone shares were up 0.9% while Telefonica shares rose 1.9%.

Telefonica investors were also eyeing news that the firm and China Unicom will buy US$1bn of each other’s shares. The swap deal increases Telefonica’s stake in China Unicom to 8.06% from 5.38%, while China Unicom will purchase shares equal to between 0.885% and 0.892% of Telefonica. Hong Kong-listed shares of China Unicom also climbed after the news.

Toshiba shares jumped in Tokyo after Reuters reported on Friday that the diversified company planned to bid for the French nuclear group Areva SA’s power transmission and distribution unit in a deal that could be worth more than US$5bn.

The Nikkei business daily separately reported that Toshiba will make a joint bid with an investment fund and other partners, and that its actual share of the purchase price would likely total several dozen billion yen, with the total price of the business bringing Areva about 400 billion yen to 500 billion yen (US$4.29bn to US$5.37bn).

Areva has previously said that it intends to find a buyer for its transmission and distribution (T&D) division by the end of the year. Media reports have listed Alstom SA and Schneider Electric SA as among others expected to take part in a round of bidding to be held later this month.

In Singapore, meanwhile, trading in shares of Chartered Semiconductor Manufacturing Ltd. was halted, with the company announcing a deal to sell itself to Abu Dhabi’s Advanced Technology Investment Co. LLC for about 2.5 billion Singapore dollars (US$1.8bn) cash or 2.68 Singapore dollars a share.

Separately, shares of Rio Tinto gained in Sydney trading after The Australian reported on its Web site that the company and BHP Billiton were looking at a A$1bn (US$830mn) merger of their Canadian diamond operations, as they try to find further synergies in addition to their iron-ore joint venture.

The Australian report added that BHP is thought to have sent employees to Canada to investigate how a merger of the two companies’ diamond mines could work.

In more Asian M&A action for the day, Hong Kong businessman Richard Li acquired a part of American International Group Inc.’s (AIG) asset management business for about US$500mn.

Li’s wholly-owned company Pacific Century Group will pay US$300mn in cash initially on closing the deal for AIG Investments, which manages about US$89bn for retail and institutional clients in 32 countries, The Wall Street Journal (WSJ) reported.

Pacific Group expects to pay an additional US$200mn to AIG in carried interest and other payments linked to future performance of the business, the WSJ report said. Li serves as chairman of Hong Kong telecom major PCCW Ltd. and is the younger son of famous billionaire industrialist Li Ka-shing.

source: Indiainfoline

Tags: Kraft-Cadbury deal, World markets live

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