News came today that Cadbury has accepted Kraft proposed buyout of £11.5 billion ($19.5 billion). Kraft’s bitter battle to buy Cadbury’s has been ongoing for months, starting with an “insulting” opening offer of £10 billion ($17 billion). The idea of Kraft “the fake-cheese company” buying out the UK’s national chocolatier had incensed many British citizens. Apparently, a bid of 14% more satisfied their national pride.
After Kraft’s initial rejection, other chocolate makers including Hershey’s and the Italian chocolatier Ferraro considered putting in their own offers. However, Hershey’s business strategy focuses on aquiring smaller, domestic chocolatiers. Cadbury is actually double the size of Hershey. I found this a very surprising fact! Here’s a Reuter’s graphic showing market share for the various confectionery companies:
Nestle was considering an offer, but instead withdrew from the process and bought Kraft’s frozen pizza business. Apparently, Nestle is trying to distance itself from the confectionery business and focus on “health and wellness” foods. Hmmm…. Pizza = health and wellness? That will make the hubby happy to hear!
The suits at Kraft argued that buying Cadbury’s fit nicely into their global strategy. Apparently, there’s much to be saved by cross-selling in shops. The Wall Street Journal estimates that the two companies will save $675 million a year just on business expenses.
Everyone, of course, is hoping that Cadbury’s chocolate does not suffer in quality.
