Kraft asks its bankers for exclusivity
KRAFT has sealed “exclusivity” deals from the banks it is using to finance its £10.3bn ($17bn) bid for Cadbury – leaving other contenders with fewer lenders to bankroll their proposals.
The US food giant has tied banks including Citigroup and Deutsche Bank into agreements where they cannot operate for its rivals.
Family-owned Ferrero of Italy and US based Hershey are believed to be in the race for the British chocolate maker but will have to trawl their net wide to find lenders to secure a package for a formal bid.
Meanwhile Kraft has in place a £5.5bn bridging loan from its group of banks which also includes Lazard, HSBC Holdings, BNP Paribas, Barclays Capital, Royal Bank of Scotland and Credit Suisse as well as Société Générale and Banco Bilbao Vizcaya Argentina (BBVA).
Kraft made a £9.8bn hostile takeover bid for Cadbury earlier this month, but it was branded as “derisory” by the company’s board.
The exclusivity deals have now prompted talk that Kraft is trying to make it harder for rivals to table bids.
Brett Barragate, partner and co-head of the financial institutions group at law firm Jones Day in New York, said such exclusivity deals were rare, adding: “It’s bad for banks’ business”.
“Kraft likely wants to make sure it has the full and undivided attention of its advisers and it doesnt want the banks to be restrained in their capacity to lend to it.”
Hershey is said to be working with JPMorgan Chase and Bank of America Merrill Lynch while Ferrero is dealing with Italy’s Mediobanca and London-based NM Rothschild.
Union chiefs at Cadbury are due to meet Kraft executives today to discuss potential working conditions.