Kraft to raise $4 billion through bond sale for Cadbury acquisition
04 Feb 2010
US food giant, Kraft Foods, which won the five-month takeover battle for Cadbury yesterday, will be raising at least $4 billion in the US debt markets to help finance its $18.7 billion acquisition of Cadbury.
Kraft expects to retire its $9-billion temporary bridge loan lined up in November from a consortium of banks to partly fund the acquisition of the London-based Cadbury, (See: Kraft confirms $9-billion loan for Cadbury acquisition), by raising $4 billion in the US debt markets, the media reported today.
The sale of bonds, expected to be at least of $1 billion will carry a maturity of 3.25-year, 6, 10 and 30-years.
Yesterday, Kraft, the world's second largest food and beverage company won control of 186-year old UK confectioner after 71.73 per cent of Cadbury's shareholders approved the deal, allowing Cadbury to become part of Kraft Foods and be delisted from the London Stock Exchange. (See: Shareholders approve Kraft's acquisition of Cadbury)
Kraft Foods' credit rating was downgraded from A- to BBB yesterday by Standard & Poor's, which had already put the company on credit watch as soon as it announced the takeover in September but put the company on a positive ratings watch yesterday.
Moody's has given Kraft a negative rating on the ground that the company will not be able to reduce its debt burden in the short term given its ''history of unfavorable shifts in financial policy."
Meanwhile, the top management of Cadbury, chairman, Roger Carr, chief executive, Todd Stitzer and the finance director, Andrew Bonfield, have all said that they would step down after Kraft took control of the British confectioner.