Wasserstein Death to Have Minimal Impact on Kraft-Cadbury Deal

The death of Lazard’s (LAZ) Bruce Wasserstein comes at an awkward time for Kraft’s (KFT) pursuit of Cadbury PLC (CBY), with Lazard advising Kraft as the November 9 deadline for making a formal bid approaches. However, currency considerations are more likely to be a determining factor than the loss of Wasserstein.

According to the Chicago Tribune, Erin Swanson, a stock analyst at Morningstar Inc., said she believes Wasserstein’s death won’t hurt Kraft’s effort to put together a formal offer for Cadbury.

Fox-Pitt Kelton analyst David Trone said Kraft would likely keep Lazard on board, “if for no other reason than the political incorrectness of dismissing them.”

Edgar Roesch, a stock analyst at Soleil Securities, said Wasserstein’s death could have an impact on a Kraft-Cadbury deal if relations between the two companies become particularly prickly.

As noted by Research Recap, a weakening pound works in Kraft’s favor by increasing the value of its suggested offer. On October 14, the pound dipped below 1.58 to its lowest level since the initial proposal, which was based on a 1.64 exchange rate. However, Thursday the pound rallied to 1.62.

The Financial Times reported that Kraft is expected to wait until after the Cadbury third-quarter sales update, due on October 21, before putting forward a formal offer.

JPMorgan released a research note on Friday saying Cadbury’s sales were trending below the company’s full-year guidance of 4-6%revenue growth. Citing industry data from research house Nielsen, Pablo Zuanic, food analyst at JPMorgan, said Cadbury’s revenue growth in UK chocolate sales had decelerated, and US gum sales, which have been slowing, were not recovering.

Comments

[Teak:]

Just as I thought all along: Wasserstein's death means that he wasn't *that* important. Investment bankers are WAY overpaid. Massive egos and aggressive behaviour is what allows them to get those ridiculous pay packages. Read "The Last Tycoons" by William Cohan and you will see what Wasserstein was about. Hell just received yet another investment banker, methinks.

Oct 16 09:30 PM