Kraft may have to sweeten deal
KRAFT’s £10.2bn approach to Cadbury may have been rejected by Todd Stitzer’s board, but it did not surprise those who have been anticipating more M&A activity since Mars’s high-profile takeover of Wrigley was announced in April last year.
The deal – which saw Mars pay $23bn (£14.1bn) in cash for America’s largest chewing-gum maker – meant the two companies morphed into the world’s largest confectionery company, with 14.4 per cent of the market to Cadbury’s 10.1 per cent share.
But analysts predicted at the time that the move would lead to increased merger activity in the secto from players whose positions were further weakened by the deal.
“Kraft is increasingly faced with a ‘fish or cut-bait’ decision in confectionery, and we believe that ‘fishing’ (for Cadbury) makes the best strategic sense,” wrote analysts at US firm Bernstein Research last year.
Kraft has now made its move, but it is likely to have to pay a lot more than it is currently offering.
“It makes perfect sense for Kraft to acquire Cadbury,” those same Bernstein analysts said yesterday, “but Cadbury can get much more”.
MANAGING DIRECTOR OF GOLDMAN SACHS INTERNATIONAL
THREE separate banks have been dropping pearls of wisdom into Cadbury’s ear about the Kraft offer: house brokers Goldman Sachs and UBS, as well as Morgan Stanley.
Heading the advisers at Goldman is Karen Cook, a managing director of Goldman Sachs International. Cook, who is also a non-executive director at Tesco and was the first female director to be appointed at Dixons, is a City superwoman to rival the likes of Nicola Horlick, juggling the demands of her career with those of her six children.
Joint head of UK investment banking Nick Reid is leading the team at UBS, having joined the firm just over three years ago, while at the head of Morgan Stanley’s team is Simon Robey, co-chair of global M&A and head of Morgan Stanley UK.