Newspaper article The Evening Standard (London, England)

Cadbury Gets into Its $50M Stride as Talk of a Buffett Bid Fades

Newspaper article The Evening Standard (London, England)

Cadbury Gets into Its $50M Stride as Talk of a Buffett Bid Fades

Article excerpt

Byline: SARAH MARKS

EXCITEMENT surrounded confectioner Cadbury Schweppes following speculation that Warren Buffett's investment vehicle Berkshire Hathaway might make a bid for the company. But analysts reckon Buffet is unlikely to launch a hostile bid for Cadbury, which has a market capitalisation of [pounds sterling]11.4 billion. Cadbury is making a big play for the fast-growing US gum market with the imminent $50 million launch of a new brand, Stride.

Graham Jones at Panmure Gordon says Stride has a "proprietary encapsulated sweetener system" to help it keep its f lavour for longer. He expects Cadbury to repeat, at next week's AGM, its 2006 estimates of 3%-5% sales growth and a 0.5%-0.75% improvement in margins.

But Jones thinks the ever-rising oil price and the additional spend on gum will make margin expansion tough for Cadbury. With a target price of 630p and a buy recommendation, he has pencilled in first-half sales of 4% and margin growth of 0.40%. With the stock trading at 15 times price-toearnings ratio he believes it still offers good value.

UK fund management groups struggled to dispel the cloud cast over the sector following accusations of fraud involving Man Group's US brokerage arm Man Financial. Man Financial has been accused of fraud and racketeering following the collapse of hedge fund Philadelphia Alternative Asset Management.

Although Man immediately launched a vigorous counterattack - accusing the receivers of simply courting publicity and behaving in a scurrilous manner - Man was one of the biggest fallers in the City. Fund managers Schroders and Amvescap also suffered.

Outside the top tier, private equity house Candover Investment posted a spectacular drop of nearly 20%, but this reflected the completion of a [pounds sterling]100 million capital restructuring. Following this week's EGM, Candover handed back approximately 457p a share to investors - around 22% of the group's market capitalisation.

Heavy buying of Vodafone helped the FTSE 100 make headway. …

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