Kraft's Takeover of Cadbury


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BSTR388 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 500 + Rs. 25 for Shipping & Handling Charges

Themes

Merger and Acquisition / Takeover / International Business
Case Length : 24 Pages
Period : 2008-2010
Pub Date : 2011
Teaching Note : Not Available
Organization : Cadbury Plc, Kraft Foods Inc
Industry : Consumer Packaged Goods
Countries : UK, US, Global

Abstract:

The case discusses the takeover of UK-based Cadbury Plc (Cadbury) by US food maker Kraft Foods Inc. (Kraft). In February 2010, Cadbury accepted Kraft’s £ 11.9 billion (US$19.7 billion) takeover offer after a battle that lasted more than 100 days. Earlier in 2009, the British chocolate maker rejected a £9.8-billion (US$ 16.4 billion) hostile takeover bid from Kraft saying that the bid did not reflect the true value of the Cadbury brand. The case explores the circumstances that led to Cadbury accepting Kraft’s offer and provides a detailed account of the deal. According to industry experts, globally, the combined group would be number one in the chocolate and confectionery segments and number two in the high growth gum segment.

The case describes the substantial benefits of the deal to both Kraft and Cadbury. The deal is expected to provide revenue synergies to Kraft over time from investments in distribution, marketing, and product development.

Issues:

» Understand the issues and challenges in Mergers and Acquisitions, particularly those involving a hostile takeover.

» Analyze the pros and cons of transcontinental and cross-cultural takeovers

» Evaluate the Cadbury takeover and its potential synergies

» Study the benefits to Kraft and Cadbury from the takeover deal.

»Analyze the future challenges of the takeover and how these can be overcome.

Contents:

  Page No.
American food major takes over British icon 1
Background note 2
The bidding war 6
The final deal 7
The rationale 10
Emotions run high 11
The aftermath 13
The road ahead 14
Exhibits 16

Keywords:

Merger and Acquisitions, Takeover, Hostile takeover, International Business,International Management, Cross-border takeover, Synergies, Post-merger Integration, Distribution, Marketing, Product development, Consumer packaged goods, Cadburys, Kraft

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