Kraft may have to sweeten deal

KRAFT&rsquo;s &pound;10.2bn approach to Cadbury may have been rejected by Todd Stitzer&rsquo;s board, but it did not surprise those who have been anticipating more M&amp;A activity since Mars&rsquo;s high-profile takeover of Wrigley was announced in April last year.<br /><br />The deal &ndash; which saw Mars pay $23bn (&pound;14.1bn) in cash for America&rsquo;s largest chewing-gum maker &ndash; meant the two companies morphed into the world&rsquo;s largest confectionery company, with 14.4 per cent of the market to Cadbury&rsquo;s 10.1 per cent share.<br /><br />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.<br /><br />&ldquo;Kraft is increasingly faced with a &lsquo;fish or cut-bait&rsquo; decision in confectionery, and we believe that &lsquo;fishing&rsquo; (for Cadbury) makes the best strategic sense,&rdquo; wrote analysts at US firm Bernstein Research last year.<br /><br />Kraft has now made its move, but it is likely to have to pay a lot more than it is currently offering.<br /><br />&ldquo;It makes perfect sense for Kraft to acquire Cadbury,&rdquo; those same Bernstein analysts said yesterday, &ldquo;but Cadbury can get much more&rdquo;.<br /><br /><strong>KAREN COOK<br />MANAGING DIRECTOR OF GOLDMAN SACHS INTERNATIONAL</strong><br /><br />THREE separate banks have been dropping pearls of wisdom into Cadbury&rsquo;s ear about the Kraft offer: house brokers Goldman Sachs and UBS, as well as Morgan Stanley.<br /><br />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.<br /><br />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&rsquo;s team is Simon Robey, co-chair of global M&amp;A and head of Morgan Stanley UK.