Cadbury Kraft Merger Agreement

Kraft also stated that it expected “reasonable cost savings” as a result of the merger. The deal follows a four-month verbal dispute between Roger Carr, CEO of Cadbury, and Irene Rosenfeld, head of Kraft`s KFT. Carr had repeatedly called the previous offer “disrespectful” and had informed shareholders that the previous offer – which was worth about 769 pence per share at Friday`s closing price – was an attempt to “steal the company.” Okay, the weak pound helps convert to books. Nevertheless, the benefits could have been even higher. Cadbury warned that Kraft was a low-growth conglomerate with a history of disappointment. Thus, a true follower of Curly Wurly would have sold the shares of kraft food that appeared in secession and would have quickly invested the proceeds in Mondelez (now actually Cadbury). In this way, they would have avoided Heinz`s pain and would have sat at about 70,000 pounds, a total return of about 600 percent. While mergers of food companies fell slightly last year, preliminary data from the Food Institute, a trade organization, showed 58 acquisitions in 2009, up from 130 in 2008, analysts expect trade relations to pick up as companies seek more size and presence in developing countries. Revisions could now be undertaken to put an end to “false wars” and leaks to the press, where mergers and acquisitions are spread informally.

It was said that Cadbury was paying $2 million a day to advise the costs to defend himself against Kraft`s advances. Apparently, it couldn`t make so much money bleed forever. The agreement between Kraft and Cadbury came together this weekend, after weeks of sometimes thunderous volleyball. Kraft`s initial and unsolicited offer in September was worth about $16.7 billion. The new offer represents a 5 per cent increase over the cadbury closing price of 807.5 pence on Monday and a 14 per cent improvement over Kraft`s first offer in September. For Kraft, the agreement offers an opportunity to strengthen its presence in emerging countries and in more growing sectors such as chewing gum and candy. “We believe the offer represents good value for Cadbury shareholders… And will now work with Kraft Foods management to ensure the continued success and growth of the company,” said Roger Carr, President of Cadbury. The question is what happened next.

Cadbury shareholders who have reinvested their wind in the enlarged company should feel saturated. In 2012, Kraft was relocated from Kraft Foods Group`s grocery store, which was later acquired by Heinz from Kraft Heinz Co. Cadbury remained in the remaining business, renamed Mondelez International Inc. Kraft Heinz failed when Mondelez flourished. Kraft shares fell 0.5% on Wall Street, while Hershey HSY rose 0.44%, which is considered less and less likely for a counter-offer. “We have a lot of respect for cadbury`s brands, heritage and people,” she said.