DealZone

Kraft said it would split itself into two listed companies, a global snacks business and a North American grocery business, and raised its full-year outlook on better-than-expected quarterly results.

Hitachi and Mitsubishi Heavy Industries have begun talks on what would be Japan’s biggest domestic merger, three sources said, heralding a long awaited shake-up of the nation’s industrial behemoths.  Japan Real Time reports on the clumsy merger kabuki which followed a leak to local media.

When Goldman Sachs executed a $479 million block share sale in ICBC this week to help American Express  hedge its position in the Chinese lender, it underscored the sensitivities and challenges of dealmaking in China.

Carl Icahn’s $10.7 billion bid for Clorox has rekindled the debate about his investment style, responsibility and impact on other stakeholders — does he keep corporate America honest or is he in it for a quick profit?

Groupon and LivingSocial are leading a virtual land grab in the world of online coupons. The NYT’s DealBook looks into the industry’s business model. A Bloomberg column weighs in on a Groupon metric called “adjusted consolidated segment operating income.”

M&A reporter Quentin Webb has just taken a look at 2010′s crop of M&A code names, the latest in a long cloak-and-dagger tradition that dates back at least to the “Barbarians at the Gate” era of the 1980s buyout barons. Click here for the full article –  just who was Mercury, Giraffe or Krypton, and why don’t Russian composers make the cut?

Links:

A post on code names from DealBook, back at the height of the merger boom, complete with code names for takeovers involving Morgan Stanley and others.

The FSA’s 2007 newsletter admonishing UK firms for “poorly chosen”  code names.

There’s an art to financing a deal and Kraft and Berkshire Hathaway ‘s brushstrokes are showing. Kraft launched a $9.5 billion debt sale to help finance its acquisition of Cadbury, and Berkshire announced a bond sale of up to $8 billion to help pay for its acquisition of Burlington Northern Sante Fe.

Berkshire’s bond sale announcement comes on the same day S&P stripped the company of its top AAA rating, citing capital adequacy and liquidity concerns related to the Burlington acquisition. An investment strategist tells Bloomberg the ratings firms are “are hedging their bets in the event of another economic downturn.”

More from Reuters and the Web:

Kraft to sell $9.5 billion debt to buy Cadbury: report (Reuters) S&P strips Berkshire Hathaway of AAA rating (Reuters) Buffett Stripped of His Last AAA Rating as S&P Cuts Berkshire (Bloomberg) End of TALF Means Bond Spreads Five-Fold Wider: Credit Markets (Bloomberg) Buyout firms face tough fundraising choice (Reuters)

Munching on a Cadbury Dairy Milk bar, Kraft CEO Irene Rosenfeld says in an interview she expects to complete the takeover of Cadbury within weeks. As Rosenfeld warmly welcomed Cadbury employees into the Kraft fold,  Twitter was buzzing with bad chocolate and cheese headlines.

Get the full story here, along with statistics of the combined Kraft/Cadbury company and a timeline of the deal.

Kraft has promised $675 million in annual cost savings from the deal, which will mean cuts to Cadbury’s global workforce of more than 45,000 during the integration process, analysts said.

With the smell of Cadbury Cream Eggs and Kraft cheese slices thick in the air, Nestle could well be getting hungry for some M&A. Will the Kraft-Cadbury deal soften the Hershey Trust enough for a Nestle merger?

Nestle has plenty of firepower with $28 billion from the sale of its remaining stake in eyecare group Alcon and Hershey might be seen as no more than a large bolt-on. In addition, Hershey is one deal Nestle could do without big anti-trust issues.

And as David Jones reports, from a Hershey perspective, some heat may be softening the the Hershey Trust’s aversion to a deal.

After four months of rhetoric, tense talks, phantom bids and late-night humor (Kraft and Cadbury agreed to a deal. Finally, mac and cheese creme eggs!), the deal is done. Here are some different takes on the deal.

The dealmakers:

Kraft Deal Cements Wasserstein Legacy, Fees for Lazard (Bloomberg) Kraft banker to become UK’s top takeover arbiter (Reuters) Kraft CEO satisfied with sweetened Cadbury deal (Reuters)

National pride:

Kraft bid hurts patriotic pride of Cadbury workers and video (Reuters) For Britain, Cadbury Takeover Isn’t Easy to Swallow (NYT)

Who won?

The recommended £11.9bn (US$19.4bn) offer by Kraft for Cadbury appears satisfactory to both parties. Kraft gets its prize, ultimately paying 13% more than it initially wanted. Cadbury shareholders receive 48% more than the value of their shares prior to Kraft’s approach.

Cadbury’s board can be pleased they managed to extract so much value when alternative bids seemed unlikely. Kraft’s management, led by Irene Rosenfeld, has remained disciplined helped by the side deal: selling its pizza business to Nestle for US$3.7bn.

Nevertheless, increasing the cash element of its offer to 500p a share, or 60% of the total bid, could cause Kraft some financial headaches, pushing its debt levels to over four times EBITDA. Rosenfeld denies that it will affect the company’s credit rating. If it did, the deal’s rationale would be dented.

Kraft was always expected to raise its bid for Cadbury, even with no real rival to its initial overture and grumblings from top shareholder Warren Buffett about Kraft possibly overpaying with its stock. The only question was how much. But if it did overpay, it did so with credit. Just in case shareholders were thinking of making a stink, CEO Irene Rosenfeld ratcheted up the cash component to a level that negates the need for shareholder approval.

Dealmakers said the agreement was struck after all-night negotiations in London. It values Cadbury at 840 pence per share. Shareholders will also get a special dividend of 10p per share, bringing the total to 850p per share. That far exceeds scaled-back expectations and was a big jump from the sub-800p levels that had so soured earlier negotiations.

With growing expectations that Hershey would muster a bid around these levels, and all of those high-brow British M&A deadlines clicking into place, getting a friendly agreement had gained urgency going into the weekend. While pundits’ palates (beyond those of fondue-chomping Europhiles, if you keep an ear on CNBC) may rebel at the swirling of chocolate and cheese, Rosenfeld has for at least a day gone from looking outflanked by both her own shareholders and grumpy Cadbury executives to a box of chocolate roses.

Tuesday’s highlights:

* U.S.-based Kraft Foods Inc and Britain’s Cadbury Plc are close to sealing a friendly deal to create the world’s largest confectionery group for up to 11.7 billion pounds ($19 billion), sources familiar with the matter say.

* Japan Airlines Corp’s board of directors decided on Tuesday to file for bankruptcy protection, Kyodo news agency says.  

* Industrial conglomerate Tyco International will acquire Broadview Security for $1.9 billion in a deal that brings together two large providers of residential and commercial security in North America, the two companies say.