So Cadbury has succeeded in convincing the UK’s Takeover Panel — the City of London body which polices M&A — to slap a “put up or shut up” order on Kraft.

Kraft now has until Nov. 9 to decide whether to make a formal offer for the British confectionery group. If it decides to walk away, it is not allowed back for six months.

Cadbury shares are still trading above the price of Kraft’s informal stock and cash offer. At just over 8 pounds per share, the current price is some 10 percent above the indicative offer, which is now worth just 7.20 pounds. But shareholders in Cadbury — which is a household favourite in the UK — aren’t being that ambitious in their expectations for an improved offer. The shares are trading at nowhere near the multiples which were initially bandied about after Kraft’s approach became public.

And despite noises about Kraft finding it difficult to raise the money it needs for the 11 billion pound bid – of which some 4.1 billion pounds would be in cash — bankers seem to think there won’t be any problem getting lenders to make the necessary loans.

The real question is how far Kraft shareholders are willing to let CEO Irene Rosenfeld stretch to get her hands on Cadbury’s famous chocolate and chewing gum brands.  Kraft stock fell another 1 percent following the Takeover Panel ruling, having dropped around $2 from above $19 to $17.6 since it went public with its approach to Cadbury.

Cadbury, which has rejected the approach, will be hoping that based on the performance of Kraft shares, Rosenfeld will be kept on a fairly tight leash.

In zombie films, the dead walk the earth and slowly annihilate the living. Such a frightening prospect may be in store for Europe, the Reuters Restructuring Summit was told.

Banks are one of the big problems, speakers said, as they are unwilling to take the size of write-downs necessary to cut firms’ debts down to a manageable size.

Firms owned by private equity, particularly the number two or three in their sector, are particularly at risk of becoming zombie companies because of their high debt levels and the lack of interest in such firms from equity investors, Simon Parry-Wingfield of Morgan Stanley said.

This may offer opportunities for distressed M&A, he said.

“The corporate world is beginning to see an opportunity … to pick up middle-market companies or sponsored companies which are stuck in a zombie world because of their balance sheets,” he said.

Those firms unable to attract new buyers or investors will be forced back into restructuring talks with lenders, he said, but their long-term future may not be bright.

“People are putting off the problem and the longer it takes to address operational issues, the harder and more expensive it is to fix them,” he said.

It’s official. Kraft has until Nov. 9 to say whether it will make an offer for Cadbury. If it doesn’t, it had to back off for six months. In the three weeks since Cadbury turned up its nose at Kraft’s $16.3 billion cash-and-share offer. In that time, price talk has centered on how much Kraft will, or is able, to raise that bid by.

Rhys Jones reports that analysts see compelling logic to a potential deal adding Cadbury’s high-growth emerging market business to Kraft’s wide-ranging distribution system, with few overlaps that would prompt competition concerns.

Cadbury reiterated its rejection of Kraft’s approach, but with other potential suitors so far mum, chief executive Todd Stitzer may have to settle for whatever Kraft comes up with. The market has taken the stock up to 800 pence, about 7 percent above the offer price for the share component. And if Kraft CEO Irene Rosenfeld (pictured above) wants to keep her own shareholders – including Warren Buffett – happy, she will be sure to contain any impulse to aggressively sweeten the deal.

French food group Danone has agreed to sell its 51 percent stake in its joint ventures with China’s Wahaha group, putting an end to legal proceedings related to the disputes between the two. In 2007, Danone accused Wahaha of illegally setting up parallel business outside their ventures. 

McGraw-Hill Cos is leaning toward selling its money-losing BusinessWeek magazine to Bloomberg LP, a person familiar with the matter tells Reuters. Bloomberg Markets, a financial news magazine that produces feature stories, and the 80-year-old BusinessWeek could be blended to make a title that would expand Bloomberg’s presence beyond its financial data clients and reach a mainstream audience.

For more on these stories and the rest of the latest deals news from Reuters, click here .

In M&A news from Wednesday’s newspapers:

Russian state bank VEB may get a stake in the troubled carmaker AvtoVAZ (AVAZ.MM) by acquiring an issue of its infrastructure bonds and converting them into equity, Kommersant business daily reports.

U.S. investment company Starwood Capital  is attempting to gain control of lodging chain Extended Stay Inc, the Wall Street Journal reports, citing people familiar with the matter.

Private equity firms Carlyle Group and 3i (III.L) are among those holding preliminary discussions to take a minority stake in India’s Strides Arcolab’s (STAR.BO) injectables business, the Economic Times reported, citing banking sources.

I was rather surprised yesterday to see an e-mail from Ogilvy PR pitching an interview with Dave Booth, the Chairman of Computer Sciences Corp, only a couple of hours after Xerox announced its $6.4 billion planned purchase of Affiliated Computer Services.

After all, CSC — an IT services company that competes with ACS, and has a market value of $8.1 billion — was the first company that came to bankers’ and analysts’ minds when I asked them who else could be in play, as tech companies look to buy into new growth opportunities.

Given how market sentiment works, any comments from the chief of a potential acquisition target like CSC could easily move the stock. As a rule, that’s why, companies typically don’t comment on rumor or speculation about themselves. So naturally, an on-the-record interview with the CSC chairman wasn’t something I could pass up.

The e-mail offered:

…(T)he opportunity to hear comments from Computer Sciences Corp. (CSC). As you might know, CSC is a marketplace contrarian that can offer a POV on the other side of the coin – staying independent.
CSC anticipates greater interest from those clients that value the objectivity of a technology-independent approach. With one less independent firm in the marketplace, CSC’s position is strengthened as a global, technology-independent option for clients.

I let Ogilvy know of my interest, and waited, and followed up, and waited. By the late afternoon, I figured the pitch was too good to be true because CSC had thought the better of it. Sure enough, the e-mail that eventually turned up in my inbox, said: “CSC now prefers not to comment.”

Wonder if that was a PR learning experience.

(Photo: CSC.com)

China is no stranger to rolling the dice on risky U.S. investments. But like most big investors, it has been staying away from the tables for a while. Now we have word that its $200 billion sovereign wealth fund is pouring $2 billion into three funds focused on U.S. distressed assets. The funds are run by Goldman Sachs, Oaktree Capital and a third, as yet unidentified manager.

At only 1 percent of its portfolio, the balance of risk to Chinese wealth is small. CIC has pumped up its investment volume recently, buying a 14.5 percent stake in commodities trading firm Noble Group for $850 million just last week. Resources may seem like a better investment for a Chinese state-linked fund than distressed U.S. assets, given the country’s gaping hunger for commodities. But China’s macroeconomic exposure to the U.S. economy is at least as important to its future as its ability to source foreign raw materials. And with the dollar against the ropes, distressed U.S. assets may offer China a better bang for its buck.

CIC made a profit of $10 billion last year as it benefited from staying largely in cash and avoiding new investments in Western banks, a source close to the fund told us in February. But it lost over half of an initial $8 billion it ploughed into private equity firm Blackstone and Morgan Stanley when the fund was set up in September 2007.

CIC Chairman Lou Jiwei (pictured above) said in Hong Kong last December that he was “not brave enough” to invest in financial institutions at that time. He seems to have found his nerve.

Xerox Corp says it plans to buy Affiliated Computer Services Inc for $5.5 billion to  expand from a document-management company into the outsourcing business. ACS would be the first big deal for new CEO Ursula Burns.

Taiwan says it will allow contract chipmakers and flat-panel firms to acquire rivals in China, a move analysts said will help cement TSMC and UMC’s lead in the semiconductor sector.

For more on these stories and the rest of the latest deals news from Reuters, click here.

And here’s the buzz from Tuesday’s newspapers:

* The Netherlands is looking into options to sell Fortis Bank Nederland assets to French bank BNP Paribas (BNPP.PA) to get approval for a merger of nationalised banks ABN AMRO and Fortis Bank Nederland, Dutch newspaper Het Financieele Dagblad reported.

* UBS  (UBS.N) (UBSN.VX) chief executive Oswald Gruebel said the bank’s U.S. wealth management unit Paine Webber is “non-core” but the Swiss bank will not sell at present, the Financial Times quoted him as saying.

* Barclays (BARC.L) has entered discussions to buy the banking arm of Standard Life (SL.L), The Times reported. Standard Life is in talks with several parties, but Barclays is believed to be the most likely bidder in a deal which could be valued at between 200 million pounds ($317.6 million) and 300 million, the paper said.