Wednesday, January 20, 2010

Kraft Foods & Cadbury Reach a Deal

After months of talks and stalled negotiations, Kraft and Cadbury finally make a deal.

Wall Street Journal:

On the takeover front, Kraft persuaded Cadbury to accept its sweetened $19.4 billion takeover offer.

Hershey made some movement to reach a deal with Cadbury while the initial gestures by Kraft were rebuffed. Perhaps the involvement by Hershey further emboldened Cadbury to hold out for a better deal longer than they might have have without Hershey’s interest.

The talks with Hershey provided Cadbury with extra leverage in negotiations with Kraft.  Hershey may have been successful in getting Kraft to pay more then they wanted to.  This deal will be worth revisiting several times in the next five years. Suggested time frames after the deal closes.

  • 6 months
  • 1 year
  • 2 years
  • 5 years


  • Are there reduced costs as a result of the merger?
    • Are there greater economies of scale in commodity purchasing (reduced costs/greater buying power)?
  • Are Sales increasing slower, the same as, or faster than competition?Are sales growing slower, the same or faster than category growth?
  • Are categories expanding or contracting?
  • Are new markets being entered?

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