Cadbury sued by shareholder for spurning Kraft bid

Cadbury Plc directors were sued by a shareholder claiming the world's second-largest candy maker should seriously consider a Kraft Foods Inc. takeover offer.

Susan Dougherty, the investor, asked a federal judge in Newark, New Jersey Dec. 23, to order the board to fulfill its duties to the company and shareholders by engaging in good-faith negotiations with Kraft. Cadbury is fighting a 10.4 billion- pound ($16.8 billion) hostile bid from Kraft.

"Rather than negotiate with Kraft in good faith in order to maximize value in a possible going-private transaction, the board has breached its fiduciary duty by spurning Kraft's offer to acquire the company for a significant premium," according to Dougherty's amended complaint. "Cadbury's purported justification for such conduct is untenable."

Cadbury Plc Chief Executive Officer Todd Stitzer told investors in New York last week that Hershey Co. could expect higher earnings per share if it bought Cadbury, while a Kraft deal would present more cost-cutting opportunities. Hershey and Ferrero SpA have said they are reviewing options for Cadbury. Neither has made an offer.

Kraft, the world's second-largest foodmaker, has said its offer represents the best value to Uxbridge, England-based Cadbury, the maker of Dairy Milk chocolate and Trident chewing gum. Kraft, based in Northfield, is the maker of Ritz crackers and Oreo cookies.

"Cadbury believes the complaint filed by Susan Dougherty is entirely without merit," Trevor Datson, a Cadbury spokesman, said in an e-mailed message.

Dougherty, a resident of Washington State, asked for class- action status for the suit, to include other shareholders.

The case is Dougherty v. Carr, 09-cv-6406, U.S. District Court, District of New Jersey (Newark).