From hostile bid to meltdown, Kraft Foods’ $17.9 billion bid on Cadbury is a done deal. Yet, how cream cheese goes with Dairy Milk is still to be tested. Make that tasted.
Kraft Foods, the largest candy, food and beverage company in the U.S., and the second largest in the world behind Nestlé, made its first move in September 2009 with a US$15.8 billion bid for Cadbury, a famous, well-established British confectionery brand, and the second largest confectionery manufacturer next to U.S. company Mars/Wrigley. The bid was dismissed in early November, with the British chocolate icon stating it was not up for sale, feeling miffed at what it deemed was an under-valued bid.
Kraft reviewed its offer and upped the bid in December 2009, resulting in political and public opposition in the U.K., with a call to protect British interested in major takeovers.
A third wheel in the wheel-and-deal was Hershey’s, another U.S. company, which distributes Cadbury in the U.S.
Upon the advise of the Cadbury board to its shareholders, the company finally approved a revised offer from Kraft, valuing the confectionery business at $18.9 billion on January 19.
Behind the bravado is one of the most powerful women in business, Kraft CEO Irene Rosenfeld. Rosenfeld is a 26-year veteran of the company whose core brands are listed in the top 50 globally, including Philadelphia (cream cheese), Maxwell House (coffee), Nabisco, Oreo and Jacobs (cookies).
The takeover brings with it apprehensions of major upheavals and job loss. Kraft needs to borrow US$11.5 billion to cover the offer.
The BBC quotes Rosenfeld saying, “We have great respect for Cadbury’s brands, heritage and people. We believe they will thrive as part of Kraft Foods.”
The Kraft takeover of Cadbury is seen by many to be the end of a British institution. However, The Mirror quotes Cadbury Chairman Roger Carr, saying, “Kraft is spending nearly £12billion ($18.6B) to buy this business. It’s not doing that to run it down.”
"People are the key to successful businesses. They need to be cared for and I’m sure Kraft understands that,” Carr said in the same report.
One significant effect of the Cadbury takeover is that it allows Kraft Foods entry to India. The Indian market is the only major emerging market it could not penetrate, despite its decade of attempts, with Kraft Foods refusing to start from scratch. Before the deal, its only presence was through Tang, the instant powdered juice drink sold through a distribution deal.
Taste tests to the Kraft-Cadbury takeover, and turnover, will be brought to the table. Hopefully, nothing like death by chocolate.
adobo magazine. The Word on Advertising.
