Kraft launches hostile bid for Cadbury, Shares jump after big rise on Wall Street: Economy Roundup

Confectionary maker Cadbury has rejected a $17 billion takeover offer from Kraft foods for the second time, after Kraft refused to raise the value of the deal.

The decision by Kraft to keep the terms of the first offer, made about two months ago, resulted in a lower offering for Cadbury’s investors due to a drop in share prices. The company labeled the move as a “derisory offer”.

But Kraft argued that the deal “represents a substantial premium to the unaffected share price of Cadbury”.

However, a source has told Bloomberg that Kraft chief executive Irene Rosenfeld is eyeing another offer, but will not overpay for the company. The source has also said Kraft has reportedly made no proposition to hold talks with Cadbury regarding the bid.

“We remain convinced of the strategic merits for both companies of combining Kraft and Cadbury,” Rosenfeld said in the formal offer statement.

Shares rise in Australia after Wall Street reaches 13-month high

Meanwhile, the Australian sharemarket has opened over 1% higher today after a third consecutive rally on Wall Street last night, after investors’ confidence surged as the G20 confirmed more aid for developed economies.

The benchmark S&P/ASX200 index was up 65.2 points or 1.39% to 4740.1 at 12.00 AEST. The Australian dollar also maintained its position above US92c, but briefly broke the US93c barrier overnight.

AMP shares gained 4.1% to $6.37, while Commonwealth Bank shares also gained 1.2% to $55.76. NAB managed to rise 1.5% to $30.04, while Westpac rose 0.8% to $26.49.

In the US, Wall Street reached a 13-month high after the agreement by G20 ministers and bankers over the weekend to keep aid flowing to help the global economy boosted investor confidence.

The Dow Jones industrial average jumped 203.52 points, or 2.03%, to 10,226.94. The Standard & Poor’s 500 Index also rose 23.78 points, or 2.22%, to 1,093.08.

Fairfax Media has recorded a 15% decline in EBITDA for the first four months of 2010, but has said modest earnings growth is expected during the second half of the year as advertising revenues recover.

“Advertising revenues remain below the same period last year, however advertising revenue trends have improved in recent months,” chief executive Brian McCarthy said at the AGM. “There are signs of increased confidence among our advertisers, which has been very pleasing.”

“However this must be tempered by the uncertainty of interest rate increases on real estate markets and on retail spending during the important lead up to Christmas, and the threat of residual problems relating to the global financial crisis that may eventuate in the coming six to 12 months.”

ANZ announces $750 million raising

ANZ has announced it is looking to raise $750 million through a convertible share offer, expected to open on 18 November and open to all resident holders of ANZ ordinary shares or convertible preference shares issued during September.

The bank said shareholder approval is not required, and it has applied for the convertible preference shares to be quoted on the ASX under the code ANZPA.

Meanwhile, retail giant David Jones has announced it will open its redeveloped Bourke Street store in Melbourne on 28 November before the Christmas period begins.

“We are very excited about the opening of Stage One of our new flagship Bourke Street store in late November 2009 in time for Christmas trading,” chief executive Mark McInnes said in a statement.

The announcement comes after the company recorded a 2.2% jump in sales for the first quarter of the financial year, and said consumer confidence is beginning to recover.

Babcock & Brown Infrastructure announces trading halt

Babcock & Brown Infrastructure Group has requested a trading suspension as it approaches the start of a $1.8 billion recapitalisation plan with investor Brookfield Asset Management.

The suspension is expected to begin at the start of trading on 24 November, but the company has not released any other information apart from the reference to the recapitalisation plan.

Insurance Australia Group has said it expects to deliver an insurance margin towards the “upper end” of its 9-11% guidance figure if current operating conditions continue.

“In the first quarter, we’ve seen the underlying performance of the business continue to improve and we’ve had the added benefit of narrowing credit spreads,” IAG managing director and chief executive Michael Wilkins said at the group’s AGM.

“In the first quarter, we’ve seen the underlying performance of the business continue to improve and we’ve had the added benefit of narrowing credit spreads… This remains subject to our normal caveats around natural perils and investment markets,” he told shareholders.