Likely Cadbury gains bolster Kraft defense

Cadbury Plc, the world's second- largest confectioner, will probably step up its defense against Kraft Foods Inc.'s hostile 10.9 billion-pound ($17.6 billion) bid tomorrow by posting increases in 2009 sales and earnings.

Revenue climbed 12 percent to 6 billion pounds in the year through Dec. 31, according to the median of nine analysts' estimates compiled by Bloomberg. So-called underlying profit from operations probably rose to 806 million pounds from 638 million pounds, the median of four estimates shows.

Cadbury is due to issue preliminary figures as it seeks to fend off Kraft, whose offer it has described as "derisory." In December, the U.K. candy maker raised guidance for so-called organic sales growth to between 5 and 7 percent annually through 2013, and lifted its profitability forecast. Cadbury has yet to receive a competing offer from Hershey Co. or Ferrero SpA, which have both said they are exploring options.

"We will get a very upbeat trading update from Cadbury," Jeremy Batstone-Carr, an analyst at Charles Stanley, said by phone. "Emerging markets are ploughing ahead remorselessly," said the analyst, who has a "reduce" recommendation.

Chief Executive Officer Todd Stitzer said in December that businesses in India, South America, the Middle East and Africa continued to show "strong momentum." Emerging markets will grow sales at a quicker pace than the company average over the medium-term, with organic revenue to increase by 10 percent to 12 percent annually, he said.

Western Europe and the U.S. "are proving more sluggish" for Cadbury, Batstone-Carr said. "It remains to be seen whether they will be able to maintain that momentum in 12 months time."

Kraft Plan Opposed

Spokesman Trevor Datson declined to comment before the release of the preliminary figures.

Cadbury shares briefly fell below the value of the cash- and-stock bid for the first time last week after Kraft's biggest shareholder, Warren Buffett's Berkshire Hathaway Inc., went public with opposition to Kraft's plan to issue new shares to fund the offer and Nestle SA ruled itself out of bidding. Northfield-based Kraft raised the cash component of its bid on Jan. 6 and has until Jan. 19 to boost its offer.

Cadbury shares fell 1 penny to 777 pence at 8:27 a.m. in London trading, compared with an offer value of 764.5 pence.

The candy maker will issue its second document to the Takeover Panel outlining its bid defense tomorrow. An updated version to include unaudited 2009 financial performance of the business will be published Jan. 14, the company has said.