David Prosser: Kraft raises the stakes

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The Independent Online

Outlook Kraft's Irene Rosenfeld is clearly set on winning the day at Cadbury. In selling her company's pizza business – one of Kraft's best performers – to finance the offer of more cash to Cadbury investors, she is betting her own future on securing the deal. If she fails, Kraft will be a significantly weaker company and Ms Rosenfeld's position will be threatened.

Moreover, although Kraft's offer is not yet finalised, yesterday's sweetener may come to be seen as a case of all or nothing. While Kraft will come under further pressure to raise its offer, rather than simply improving the terms, its shareholders, led by Warren Buffett, are determined to keep it on a tight rein. Mr Buffett's Berkshire Hathaway has fired a warning shot across the bows of Kraft, refusing to sign a blank cheque for the purchase of Cadbury.

So is it enough? That question is impossible to answer: though the offer represents a substantial premium to the price at which Cadbury was trading before this battle began, investors had been hoping for significantly more and may yet buy the British company's argument that Kraft has come in too low. On the other hand, with rival bidders looking less likely now Nestle is out of the picture, Kraft is the only game in town for investors who want to cash in on the substantial gains prompted by this saga. This one remains too close to call.