Kraft Foods, the largest food and beverage company in the US, faced with a fast approaching deadline to make a formal offer for Cadbury has lined up $9-billion in bridge financing from a consortium of banks to fund its $16.7-billion bid for Cadbury.
The stock of Illinois-based Kraft, which has been closely watched by investors and analysts since Cadbury rejected its September $16.7-billion (£10.2 billion) acquisition offer, (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer) fell nearly 3 per cent to $26.75 after reporting a weak third-quarter result yesterday.
Kraft's stock price was $28.10 in early September during the time it made a bid for Cadbury.
Faced with a 9 November deadline from Britain's Takeover Panel to either submit a formal offer for Cadbury or abandon the deal for six months, (See: UK regulator sets 9 November deadline for Kraft's Cadbury bid), Kraft is reported to have obtained $9 billion (£5.5 billion) bridge financing from a consortium of nine banks, which, according to Reuters, include lead underwriters Citigroup, Deutsche Bank, HSBC Holding and Barclays.
In order to make a second bid for Cadbury before the 9 November deadline set by the UK regulator, Kraft has to show the UK's Takeover Panel that it has committed financing in place.
Kraft had managed a similar bridge loan in November 2007, when it obtained a $5.5 billion 364-day bridge loan to back its acquisition of LU Biscuit of France.