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   Market Date: 21-10-2014   
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Cadbury slides on profit-taking

Category: Capital Market


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Cadbury slides on profit-taking

 

Its share price was not stable throughout last week as it hovered between N14 and N15 per share on the five trading days as speculators took advantage of its appreciation last month.  The confectionery and food drink firm had grown significantly by 56% last month.

 

 

But a stockbroker, who spoke to Business Hallmark on conditions of anonymity, insisted that despite the drop in its share price, there was high demand for Cadbury shares at as the close of trade on Friday. Most investors are taking position in Cadbury Nigeria in anticipation of a turnaround in the parent Company, which is expected to rub-off positively on its subsidiary, here in Nigeria.

 

 

According to the Head, Corporate Affairs, Cadbury Nigeria Plc, Mr. Kuffre Ekanem, Cadbury Nigeria, Cadbury recorded a success in its recent Rights issue, which according to him was a whooping 86% success. He added that the Company is now debt-free and  would now engage on products development as the interest elements on its previous debts would now be ploughed back into the Company.

 

 

The acquisition of Cadbury Shweppes by Kraft Foods KFT, which succeeded in staking 500 pence per share in cash and 0.1874 Kraft shares for each Cadbury share (up from its previous offer of 300 pence per share in cash and 0.2589 Kraft share for each Cadbury share) early last month has generated a lot of interest. Cadbury Shweppes has 50.2% stake in Cadbury Nigeria Plc. When Kraft went public with its interest in Cadbury in early September, it had said it hoped to reverse Cadbury's plans to close its Somerdale sweet factory near Bristol in southwest England and also invest in Cadbury's main British plant at Bournville.

 

 

Cadbury said in 2007 that its Somerdale plant would close by 2010 with 500 job losses and that Bournville will lose 200 jobs by 2010 as the company shifts production to Poland as part of a strategy to drive sales growth and boost margins. The Somerdale factory, in the town of Keynsham near Bristol, is expected to close completely toward the end of 2010.

 

 

In fact, insinuations that that Kraft may have leveraged to buy Cadbury could not be proved. However, Business Hallmark investigation revealed that Kraft had sold its North America pizza business to Nestle to raise $3.7 billion as part of the $19.5 billion it paid. Nevertheless, the great granddaughter of Cadbury's founder, Egbert Cadbury; Felicity London, suspects that Kraft may “asset strip to afford anything.

 

(Source:Business Hallmark)



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