Is the Cadbury Deal Sweet for Food and Beverage ETF?
January 23rd at 1:00pm by Tom Lydon
The world’s second-largest confectioner has approved a revised takeover bid from Kraft Foods, in a $19.5 billion deal that may seem bittersweet. What does the related food and beverage exchange traded fund (ETF) stand to gain from this?
After months of less-than-friendly negotiations, Cadbury (NYSE: CBY) has accepted a bid from food giant Kraft (NYSE: KFT). Cadbury Chairman Roger Carr said the $19.5 billion deal amounted to “good value for Cadbury shareholders.” [The original bid created a heated debate.]
Originally, the $16.3 billion approach did not work out. Once Kraft sweetened the terms of the deal — by raising the amount of cash it was offering alongside its own shares — Cadbury bit, reports Simon Dawson for Time. The new deal is expected to be granted shareholder approval before the deadline expires in two weeks. [Read about the battle here.]
The British confectioner may be just the sugar rush that Kraft needs, after recent quarterly earnings reports have looked a bit anemic. The related ETF will get the boost it needs, PowerShares Dynamic Food And Beverage (NYSEArca: PBJ), which holds 4.6% in Kraft. Also, Vanguard Consumer Staples ETF (NYSEArca: VDC) has a 3.8% weighting in Kraft.
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