LONDON (Reuters) - Three of London’s top rainmakers are set to square up against a superstar of the 1980s merger era if the looming takeover battle between Kraft KFT.N and Cadbury CBRY.L ignites.
North America’s largest food group has yet to make a formal offer for the British confectioner, but both sides have engaged big name bankers in case battle ensues.
The stakes are high, with Cadbury’s bankers set to share a fee pot of up to $49 million and Kraft’s advisers looking at up to $42 million, according to estimates from Thomson Reuters and U.S. consulting firm Freeman & Co.
In Kraft’s corner is Bruce Wasserstein, the Wall Street veteran who achieved fame as an adviser to buy-out house KKR on its titanic acquisition of RJR Nabisco in 1989, recorded for posterity in the book Barbarians at the Gate.
Wasserstein -- chairman and chief executive of investment bank Lazard (LAZ.N) -- is flanked by senior bankers James Agnew and David James from corporate brokers Deutsche Bank (DBKGn.DE) and Citigroup (C.N).
Cadbury is backed by the trio that ran last year’s demerger of its U.S. soft drinks business Dr Pepper Snapple -- Goldman Sachs’ (GS.N) Karen Cook, Simon Robey of Morgan Stanley (MS.N) and Nick Reid of UBS UBSN.VX.
City “superwoman” Cook combines her role as a partner at the bank with raising six children and a non-executive directorship at UK supermarket group Tesco (TSCO.L).
She has worked on four deals in the last three-and-a-half years with Roger Carr, chairman of both Cadbury and Britain’s largest gas retailer, Centrica (CNA.L).
Robey, Morgan Stanley’s co-chair of global M&A, has worked on a string of high-profile deals for the bank, including the defense work that helped UK-listed miner Rio Tinto (RIO.L) see off a $66 billion hostile bid from rival BHP Billiton (BLT.L).
Reid is working with his co-head of UK investment banking Tim Waddell and senior M&A banker James Robertson.
“This team has been advising Cadbury for over two years. They are used to working together in adverse conditions,” said a consumer banker who knows them.
“They all have big reputations in London,” he added.
Reid and Cook go back further than that, having worked together at Schroders, the UK investment bank that was acquired by Citigroup in 2000, and Goldman Sachs. Reid joined UBS from Goldman in September 2006.
The tactics Cadbury’s bankers have used for other clients offer a glimmer into how an engagement with Kraft might unfold.
They helped salvage Cadbury’s exit from the drinks business with last year’s demerger of Dr Pepper Snapple when private equity firms could no longer afford to buy the assets.
Cadbury’s shares rose sharply after the disposal, the final reversal of the buying binge that had seen the company bulk up to become a global beverages player at the expense of its focus on confectionery.
Cook and Reid have also shown they can extract a good price from buyers. Cook was one of the advisers that helped Cadbury sell its European soft drinks business in February 2006 to Blackstone (BX.N) and Lion Capital for $1.85 billion.
That was a fairly good price considering trade buyers were wary after the French government blocked Coca-Cola’s (KO.N) acquisition of the business on anti-trust grounds in 1999.
Reid and the UBS contingent also helped underperforming UK brewer Scottish & Newcastle extract two raised offers out of Carlsberg (CARLb.CO) and Heineken (HEIN.AS) before it agreed to sell itself for 7.8 billion pounds in January 2008.
Robey was Rio Tinto’s lead adviser in the determined defense against BHP Billiton (BHP.AX). He worked with Rio this year on the canceled $19.2 billion investment from Chinalco.
That was a hard sell to UK shareholders, but a vital lifeline at the height of the credit crisis for a company saddled with $38 billion in debt.
When markets improved, Rio dumped Chinalco in June, opting instead for a $21-billion rights issue and iron ore joint venture with BHP.
Analysts said the final outcome was better for Rio’s credit quality than the Chinalco deal, and praised the level of cost savings and synergies that would be achieved.
Editing by Sitaraman Shankar