Kraft faces tougher Cadbury pitch after results

By David Jones

LONDON (Reuters) - Kraft (KFT.N) faces a tougher task winning over Cadbury (CBRY.L) shareholders in its bid battle after disappointing results late Tuesday cut analyst estimates of what it could afford to pay for Cadbury.

Kraft's results, released after the market close, reinforce the view it will rubber stamp an original offer and turn the bid hostile, before using a $9 billion bridge loan to sweeten the cash element of its offer at a later date, they added.

Pablo Zuanic at broker JP Morgan said Kraft's results were likely to cap any improvement in its offer.

"Re: the Kraft bid, we now assume a lower price on lack of competing bids, lower synergy assumptions and our growing belief Kraft could walk away... We doubt Kraft will go over 780 pence," he added.

Kraft launched a cash-and-shares offer for the British confectionery group in early September which Cadbury promptly rejected, and by late September the UK Takeover Panel ruled that Kraft had until November 9 to make a formal binding bid for Cadbury.

The initial approach was priced at 745p a Cadbury share, or 10.2 billion pounds ($16.8 billion), but the fall in Kraft shares make it presently worth around 733p, against a current Cadbury share price of around 776p.

VALUE MAY DIP

The value of Kraft's offer - some 60 percent in new Kraft shares - is likely to dip further when Kraft shares open later on Wednesday. Kraft (KFT.F) shares were off 2.7 percent at 18.23 euros in early European trading.