DealZone

Sweet nothings for Cadbury

So far, Cadbury’s hope that Italy’s Ferrero and U.S.-based Hershey will make a counter-bid for the chocolate company look like a pipedream. Cadbury’s stock has ticked up but is still pretty much where it has been since Kraft’s hostile $16.8 offer hit the market. Nobody appears to be buying the idea that a white-chocolate knight will come up with a bid to seriously rival Kraft’s.

The chance of a joint Ferrero-Hershey bid may be slim. Questions about funding commitments and investment restrictions set on Hershey by its charitable trust ownership structure make any deal involving the maker of chocolate kisses a tough sell.

And market sources say that if they were successful, a Ferrero-Hershey tie-up would likely lead to a breakup of Cadbury along geographic lines.

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Sigh of relief for Cadbury? Hershey and Ferrero may join forces to launch a rival bid for Kraft‘s offer for the British confectioner, a source tells us. On a rather much smaller scale, Cosmo Pharmaceuticals plans to buy rival BioXell for around $40 million, it says. For these and all other Reuters stories on deals, click here.

Plus a look at other media (some links may require subscription):

Hyundai Motor Co is planning to sell off its stake in affiliate Hyundai Mobis Co in a block trade to comply with antitrust rules, according to online media provider eDaily.

Apollo Management, the private equity firm headed by former Drexel Burnham Lambert executive Leon Black, is planning to list on the New York Stock Exchange, the Financial Times says.

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Ferrero — the maker of Nutella — might be considering an offer for an alliance with Cadbury, Il Sole 24 Ore says, saving the British group from Kraft’s clutches. Cadbury shares aren’t moving much, which says something about how the market sees the story. Elsewhere, Austria’s Erste Bank closed its rights issue late on Monday, with demand less than stellar.

The Lehman estate files its long-expected lawsuit against Barclays Capital, according to court documents. And with UBS’s investor day and the Euro Finance Week conference in Frankfurt on elsewhere, all eyes are on Europe’s banks again.

For all other Reuters stories about deals, click here.

The derision thing

Derisory (di-ry-ser-i) adj. deserving derision; too insignificant for serious consideration.

In lambasting a formal takeover offer from Kraft as “derisory”, Cadbury Chairman Roger Carr has both ratcheted up the rhetoric (an earlier letter to Kraft did not use this term) and struck a tone familiar to connoisseurs of bid battles. Carr, of course, is a veteran dealmaker himself.

UK targets have often found rejecting an approach as “derisory” is just scornful enough, without incurring the wrath of the Takeover Panel. Other approaches to have met with the same brushoff include Macquarie’s 2005 hostile bid for the London Stock Exchange and BHP Billiton’s epic tilt at rival miner Rio Tinto.  Over in Ireland, Aer Lingus has decried the advances of budget archrival Ryanair in exactly the same manner.

Comcast, GE and Kraft await Europe’s pleasure

The defining deals of the week, Kraft’s now officially hostile bid for Cadbury and a deal to sell a majority stake in NBC Universal to Comcast, hinge on decisions of Europe Inc, so they could well drag on many more weeks.

This morning, Kraft formally bid for Cadbury with the same offer mooted two months ago, before today’s put-up-or-shut-up deadline. Cadbury has already said no to these terms, and can be expected to do so again. But the sinking expectations that Kraft might pay more, and the lack of any other buyers coming forward, don’t help to make the case for a successful hold out by Cadbury executives.

Over the weekend we learned that GE and Comcast agreed on a valuation of around $30 billion for a joint venture between NBC Universal and Comcast, ironing out what has been a key obstacle in talks so far. But French media conglomerate Vivendi, which owns 20 percent of NBC Universal, has not yet agreed to a deal, a source said.

Irene prepares to tough it out

It looks like Kraft CEO Irene Rosenfeld is getting ready to play hardball with her reluctant target, British chocolate maker Cadbury.

Cadbury investor Mario Gabelli will be disappointed in the short term – he wanted a small kiss from Irene after all - but a formal offer from the North American food group sets in motion an 88-day process under UK takeover rules.

That should give Kraft plenty of time to sweeten its offer to something starting with an eight – the 800p per share bar regarded by many as the minimum price needed to tempt Cadbury to the negotiating table.

DealZone Daily

Talk continues to swirl around Kraft’s potential bid for Cadbury. On Thursday Reuters reported a top shareholder in the British confectioner would accept 820 pence a share — well above Kraft’s first cash and shares offer but only a little higher than where the stock has been trading in recent days.

Activist investor Nelson Peltz, who has stakes in both Cadbury and Kraft, may now become a factor, a report says. A contractual obligation not to criticise Kraft’s management comes to an end on Friday. Will fireworks ensue when the gag is removed?

Other deal-related news in Friday’s papers include:

* BP Plc (BP.L) has had talks with Ghana’s national oil company about a possible joint bid for Kosmos Energy’s stake in the huge Jubilee oilfield off the coast of the country, Bloomberg said, citing two people familiar with the matter.

from Commentaries:

Takeover Panel sets Cadbury clock ticking for Kraft

KRAFT-CADBURY/So Cadbury has succeeded in convincing the UK's Takeover Panel -- the City of London body which polices M&A -- to slap a "put up or shut up" order on Kraft.

Kraft now has until Nov. 9 to decide whether to make a formal offer for the British confectionery group. If it decides to walk away, it is not allowed back for six months.

Cadbury shares are still trading above the price of Kraft's informal stock and cash offer. At just over 8 pounds per share, the current price is some 10 percent above the indicative offer, which is now worth just 7.20 pounds. But shareholders in Cadbury -- which is a household favourite in the UK -- aren't being that ambitious in their expectations for an improved offer. The shares are trading at nowhere near the multiples which were initially bandied about after Kraft's approach became public.

Time for Kraftiness

It’s official. Kraft has until Nov. 9 to say whether it will make an offer for Cadbury. If it doesn’t, it had to back off for six months. In the three weeks since Cadbury turned up its nose at Kraft’s $16.3 billion cash-and-share offer. In that time, price talk has centered on how much Kraft will, or is able, to raise that bid by.

Rhys Jones reports that analysts see compelling logic to a potential deal adding Cadbury’s high-growth emerging market business to Kraft’s wide-ranging distribution system, with few overlaps that would prompt competition concerns.

Cadbury reiterated its rejection of Kraft’s approach, but with other potential suitors so far mum, chief executive Todd Stitzer may have to settle for whatever Kraft comes up with. The market has taken the stock up to 800 pence, about 7 percent above the offer price for the share component. And if Kraft CEO Irene Rosenfeld (pictured above) wants to keep her own shareholders – including Warren Buffett – happy, she will be sure to contain any impulse to aggressively sweeten the deal.

Everybody Likes Cake

More big consumer brands are being dealt across the Atlantic. With Kraft’s bid for Cadbury churning, consumer goods giant Unilever plans to pay 1.275 billion euros ($1.87 billion) for a chunk of Sara Lee’s personal care brands, helping the cake maker sheds non-core businesses to focus on food. Sara Lee shareholders are sweet on the deal – bidding the stock up more than 9 percent in early trade. In a space reserved for winners and losers, this deal looks like it has natural benefits for both parties.

The asset sale is quite a bit less rich than the chocolate deal, which is for the whole of Cadbury rather than just its brands, the soap business brings with it a fresh scent of a recovery in deals activity. It is the first major acquisition for the Anglo-Dutch company’s new Chief Executive Paul Polman, and Sara Lee’s CEO Brenda Barnes is still only half-way through her business-shedding exercise.

Credit Suisse analyst Charlie Mills said the price Unilever is paying of 10 times core operating profit, or EBITDA, is not huge by industry standards, reflecting the fairly disparate collection of assets. Brylcream hair gel is part of the mix.