After a dearth of major M&A in the food industry in recent months, the prospect of a mega-deal involving US food giant Kraft Foods and renowned UK confectioner Cadbury has got people talking today (7 September) Cadbury has rebuffed Kraft's initial approach but the Milka and Toblerone maker is unlikely to give up easily. Dean Best looks at the twist and turns that could lie ahead.

1) Kraft comes back to the table with better offer

The analyst reaction to today's news has been mixed and even analysts supportive of Kraft and Cadbury coming together believe the US group will need to return to the table with a sweetened bid. Kraft's offer would undoubtedly give Cadbury shareholders a nice premium on the company's closing share price on Friday (4 September) but the UK firm's stock has soared today - indicating that the market believes a second offer (or a counter-bid from elsewhere) is likely. However, any further bid from Kraft may need to include a more generous cash element; some UK investors may be wary of taking US stock.

2) A bid from Nestle

Paul Bulcke, Nestle's CEO, was tight-lipped today on whether the Swiss food giant would launch a counter off for Cadbury. A Nestle bid for Cadbury would probably run into anti-trust issues, particularly in markets like the UK, but the Kit Kat maker could be attracted to gum brands like Trident. Nestle could circumvent any competition problems through a joint bid with the likes of US chocolate maker Hershey, with Cadbury's chocolate assets heading across the Atlantic.

3) Cadbury tries again with Hershey

Cadbury CEO Todd Stitzer is understood to have made contact in the past with his counterparts across the pond in a bid to join forces with Hershey but the US firm, run by a charitable trust set up by the company's founder Milton Hershey, has so far been steadfast in its determination to stay independent. Cadbury's own doggedness to stay in charge of its own destiny could see Stitzer once again reach out to the Americans, although the resolve of the Hershey Trust to retain control over the company could once again scupper any tie-up.

4) Mars enters the fray

Mars's 2008 acquisition of gum giant Wrigley saw the privately-owned US food maker surpass Cadbury as the world's largest confectioner. A deal between Cadbury and Hershey would give Mars a far stronger rival in its own backyard and the Snickers and Milky Way owner may want to step in to protect its leadership position. However, little is known about whether the famously discreet Mars would have the financial firepower to launch its own bid for Cadbury. What's more, a Mars/Cadbury combination would present competition issues of its own.

5) Private equity throws its hat into the ring

An unlikely, though possible, scenario. In recent months, private equity players have been more interested in small- to mid-sized acquisitions like UK crisp maker Tyrrells and soup firm TSC Foods. Even the likes of Weetabix, United Biscuits and Birds Eye would be small fry compared to Cadbury. Moreover, there remains uncertainty over the finances of private equity in the wake of the crisis of the last 12 months - and that's notwithstanding the lack of synergies that a trade buyer could bring to the table.