Kraft and Cadbury Stop Pretending; Hershey Likely Irrelevant

Kraft (KFT) and Cadbury (CBY) spent months exchanging snide remarks, pretending to not really like or want each other, but just before the deadline, Kraft raised its bid -- and Cadbury's board more or less replied, "Okay, cool." The once hostile takeover attempt has gained official approval, and shareholders are expected to accept the new $19.4 billion offer by the Feb. 2 deadline.

The entire saga has been peppered with rumors of rival bids for Cadbury, and last week saw particularly ardent predictions that Hershey (HSY) would attempt to go it solo, but it's unlikely that had anything to do with Kraft's decision. Analysts had said all along that Kraft would need to offer at least 800 pence per share to persuade Cadbury stockholders, with some setting 840, 850 or even 920 as the absolute minimum. (Kraft's previous offer was worth about 765 pence per share, while the upgraded bid is closer to 840 pence.)

Furthermore, there was doubt as to whether Hershey could actually afford to top Kraft's bid, even at its original value.

Kraft shareholders may not be thrilled about the deal, but they don't have a say in the matter. Warren Buffett's Berkshire Hathaway Inc. recently warned against overpaying for Cadbury, but Kraft revamped the deal and made sure it would not issue enough new stock to require shareholder approval.

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