Kraft''s cash-and-share deal values each Cadbury share at 840 pence, with shareholders also set to get a 10p special dividend, bringing it to a total of 850p, which prompted a unanimous recommendation from the Cadbury board in favour of the deal.
"Kraft has got a very good deal here. 850p is predicated on the current Kraft share price, and I would expect Kraft''s shares to rise today on the back on substantially less Kraft shares being issued as part of the deal," said Panmure Gordon analyst Graham Jones.
Kraft said the deal would be accretive to earnings in 2011 by around 5 cents on a cash basis and give a mid-teens percentage return on investment, well in excess of Kraft''s cost of capital. The new bid consists of 500p of cash and 0.1874 new Kraft shares, compared to Kraft''s original offer of 300p cash and 0.2589 new Kraft shares, which valued the shares in September when the deal was first proposed at 745p.