Is Kraft set to make a new bid?

Kraft to approach Cadbury?

After the failed takeover of Cadbury by Kraft previously, there are rumours that they are gearing up to make another bid before they are hit by the deadline.

Back in September, US-based Kraft made a GBP£10.2 billion takeover bid for Cadbury, which was rejected as "an unappealing prospect". With news of Carbury's profit boost during the third quarter of the year, it has been expected that Kraft would put a new bid in. Rumours are rife that Kraft CEO Irene Rosenfeld is putting together a US$16 billion hostile takeover.

Deadline

Under Takeover Panel rules, the food group has until 5pm next Monday to make their intentions known, or they have to walk away for six months.

Tomorrow will see Kraft presenting its third-quarter results to investors, The British newspaper The Times says. It is unlikely to make a formal offer for Cadbury before its own shareholders have had a chance to analyse its financial performance carefully.

Investors in Cadbury, which has a big American shareholder base, will also want to compare Kraft's sales with the strong third-quarter numbers released by the company ten days ago.

Options

Technically, Kraft has three options to contend with before next Monday's deadline:

* Launch a hostile offer.
* Make a higher informal offer bid for the business in an attempt to engage Cadbury's management in talks.
* Walk away from Cadbury.

Deal

"The third quarter offers Kraft a chance to demonstrate that 'old Kraft' is continuing to turn the corner before potentially pairing up with Cadbury," Merrill Lynch analysts said in a research note.

They added that the results could be "an important driver" of sealing investor confidence in the planned acquisition, Financial Times said.

Kraft and Cadbury have been locked in talks with the British confectioner's shareholders over the past fortnight to establish their views on a deal. Cadbury's shareholders have started to put a price on a deal with Kraft, with one top shareholder saying last week that it would consider backing a merger at 820p a share, although others are understood to be reluctant to accept Kraft shares - which have underperformed the American market in recent years - as part of a deal.

Bank of America Merrill Lynch said in a note that the results were crucial for shareholders, who are still not convinced of the merits of a merger between the two groups. "Kraft must demonstrate it is ready to take on Cadbury," the bank said.

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