This article is provided to FT.com readers by dealReporter—a news service focused on providing insightful intelligence on event driven situations to investors. www.dealreporter.com
--------------------------------------------------------------------------------------------------------
Nelson Peltz and the Qatar Investment Authority’s stake building process in Cadbury is unlikely to lead to a bid for the entire company, two industry bankers told dealReporter.
QIA is no longer viewed as a viable bidder after it pulled out of buying Sainsbury, said one of the bankers. Nelson Peltz doesn’t have the money to make a bid for Cadbury, and would need to tap the debt markets just like any PE firm, and leveraged financing for a large deal remains difficult, noted a second banker.
Peltz’ Trian and QIA formed a special purpose entity which increased Trian’s stake in Cadbury to close to 5% from 2.98%, said a news report. It’s unclear what Peltz’ intentions are for Cadbury, since the situation is already in motion, said the first banker and a third industry banker.
Cadbury is already working on a demerger of its confectionery and beverages business, which is expected to lead to a spin-off of the beverage unit.
Nothing can happen until Cadbury spins off the beverage unit, said the first banker. And the problem with selling the confectionery business is that the only viable buyer for the business, Kraft Foods, isn’t enthusiastic about it, he added.
Kraft has no interest in buying Cadbury confections, several industry bakers have said. Even though Kraft owns Milka and Toblerone in Europe, Cadbury, which is a global leader in gum, isn’t a fit for Kraft, they said.
The deal that has been long expected is between Hershey and Cadbury, which reportedly held talks this year. That deal appears to be stalled at the moment, however, because the charitable trust that owns Hershey doesn’t want to give up control of Hershey. Since Cadbury confections is bigger than Hershey, it’s more difficult for Hershey to buy Cadbury, the second banker said.
After Cadbury spins off its beverages unit, buyers interested in the confections division could look at it again depending on where its share price is trading, the first banker said. QIA would not comment on the situation.
--------------------------------------------------------------------------------------------------------
For more information or to inquire about a trial please email sales@dealreporter.com or call Europe/EEMEA: +44 (0)20 7059 6160 Americas: +1 212 686-3076 Asia-Pacific: +852 2158 971
