For Whom The Bell Tolls: Time Running Out On Kraft's Cadbury Bid (KFT, CBY)
November 06, 2009 7:32 PM
It could prove to be another Merger Monday next Monday or a day of disappointment for Kraft (NYSE: KFT) and Cadbury shareholders (NYSE: CBY) as the first trading day of the new represents the deadline for Kraft to formalize its $16.9 billion for Cadbury.
If Kraft can't strike a deal for U.K.-based Cadbury, the world's second-largest candy maker, it will have to walk away for six months under U.K. law. Cadbury wants to remain independent, so this is a hostile bid by Kraft. Additionally, a consumated deal would add $10 billion in debt to Kraft's balance sheet, which already sports $20.7 billion in debt.
The current offer by Kraft is an 8% discount to where Cadbury currently trades. Kraft, a Dow Jones Industrial Average member, is scrambling to find financing for the deal and sources say the number of investment banks involved in the deal may swell to 18.
Shares of Kraft are down about 4% since the bid for Cadbury was announced.
