LGIM and Neptune critical of 'undervalued' Cadbury deal

Legal & General Investment Management and Neptune have criticised Cadbury management over Kraft's agreed takeover bid, saying the 850p per share deal undervalues the confectioner.

The largest UK shareholder of Cadbury at 5.1%, LGIM says the bid "does not fully reflect" the long-term value of the company.

"We are disappointed management have recommended the offer for this iconic and unique British company, but are grateful for the constructive way they have engaged with us throughout the process," LGIM head of active equities Mark Burgess says.

Neptune Investment Management managing director Robin Geffen says it is a poor deal for everyone involved in Cadbury.

"The latest bid for Cadbury's still involves part payment in Kraft shares which, at the current level and with the very high level of debt, are unappealing at best," he says.

"This deal is ultimately bad for everyone - shareholders do not get a full value, bank holders will likely suffer a down grade and employees will lose their jobs in large numbers.

"Sadly, Cadbury's management will not fight on and too many large shareholders are focused on very short-term performance."

L&G Growth trust manager Robert Churchlow applauded Kraft chairman and chief executive Irene Rosenfeld over the Cadbury capture.

"Well done Irene. Personally, I think 850p is a good 10%-20% below what she should be paying," he adds.

"Cadbury's management have failed to get a more competitive auction going and do not now fancy seeing the shares back at 700p, which is where they would probably be heading without a deal.

"It is obviously great for our short-term performance, but where are we going to find a replacement for such a great British company for our portfolios?"