A bidding war between the big guns in private equity is now expected to decide the fate of Cadbury's soft drinks division and foodservice giant Brakes.
Both Cadbury and Brakes' US owner Clayton, Dubilier & Rice, are understood to be drawing up prospectuses with a view to possible flotations of the businesses. However, the level of interest from deal-hungry private equity firms such as Kohlberg Kravis Roberts, Bain Capital, Texas Pacific Group, Blackstone and Lion Capital has meant that straight sales were now much more likely, said analysts.
Cadbury claimed that demerging its confectionery and drinks businesses would unlock their potential for shareholders.
However, offloading the drinks arm would make the confectionery business vulnerable to a takeover, which could mean that Cadbury could disappear from the stock exchange before the year is out, said analysts at Investec Securities. "The City has been speculating about the break up of Cadbury for ages. It seems that the sum of the parts is worth more than the whole."
Private equity firms are also sniffing around ethnic foods firm Patak's, which has appointed merchant banker NM Rothschild to explore strategic options for the business, as well as Vimto-maker Nichols which is currently in discussions with an undisclosed party regarding a possible sale.
Although Inter Link Foods had received some approaches from private equity firms in recent months, it was hard to see its attraction at the moment, according to one analyst. "They are going to have to get a grip on their debts first.
"Inter Link is already leveraged up to the hilt. Its equity isn't worth anything."