Cadbury Shareholders Losing Potential Gains

In waiting for a higher bid, Cadbury shareholders have been injured twice recently by not accepting the Kraft offer. The first comes from the decline in market price. The second comes from the loss of potential future gains from holding KFT shares, which had been underpriced, and likely remain so. By changing the mix to include more cash and less stock, Kraft has reduced the future bonus that CBY shareholders might gain from selling to Kraft.

References:
Reuters story, from Yahoo Finance: Cadbury shares dip below Kraft bid for first time
BusinessWeek, citing Bloomberg story: Cadbury Price Falls to Near Kraft Offer

Some shareholders see any price under 800p as "horrible." If Kraft walks away, CBY will likely drift below 800p, since no other suitor will be seen as emerging. As I have written before, this is a dominant strategy for Kraft, with no options that Cadbury currently sees as workable available to it to counter a Kraft departure from its offer. Kraft can thrive in the absence of Cadbury.

Odds of Hershey bid: 10%
Odds of Ferrero bid:
Odds of Nestle bid: 5%
Odds that Kraft abandons offer: 35%
Odds of other offer (e.g. private equity): 5%
Odds of a reduction in the Kraft offer price: 15%