9/21/2009 10:50 PM ET Recommended Amazon Reading
(RTTNews) - According to the Wall Street Journal on Monday, UK-based confectioner Cadbury Plc (CBY: News ,CBRY.L: News , CDSCF.PK), while softening its stand on the deal with he world's second largest food company Kraft Foods, Inc. (KFT: News ), acknowledged that the proposed combination would make "some strategic sense". This was revealed in an interview with Cadbury's Chief Executive Officer Todd Stitzer.
Meanwhile, Uxbridge, U.K.-based Cadbury has separately asked the U.K. Panel on Takeovers and Mergers to put Kraft on notice that the suitor must formalize its bid soon, along with committed financing. Responding to media reports on Tuesday, Kraft had stated that it does not need to sell operations like Oscar Mayer hot dogs, Maxwell House coffee or any of its other brands to afford its US$16 billion bid for Cadbury.
Citigroup Inc. and Deutsche Bank AG are reportedly working on setting up debt financing to cover about half of the offer amount to buy Cadbury. The financing would consist of a bridge loan to be repaid with the proceeds of an investment-grade bond offering.
However, Kraft has insisted that it can finance its offer without any threat to its existing investment-grade credit rating. A source familiar with the bid also dismissed suggestions that Kraft might seek funds from Warren Buffett, its largest investor, to finance a higher offer.
There is also speculation that rivals such as Swiss food giant Nestle (NSRGY.PK), The Hershey Co. (HSY) and private equity groups such as KKR Private Equity Investors, L.P. are considering an approach to buy the group. Hershey and Cadbury executives discussed a merger in 2007, but the conversations never led to a deal.
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