Kraft Foods M;a

Written Case Analysis On Case canvas by Case Cadbury agrees, kraft takeover squeeze Story In 2009, the US food companyKraft Foods launched a contradictory bid for Cadbury, the UK-listed chocolate maker. Cadburyis a popular Britishconfectionerycompany and is the industrys second-largest globally afterMars, Incorporated. It was acquired by Kraft Foods in January 19, 2010.As became clear close to on the button ii years later in August 2011, Cadbury was the final achievement necessary to allowKraft to be restructured and indeed splitinto two companies by the end of 2012 a grocery business worth just about $16bn and a $32bn global snacks business. A Krafty Approach to Cadbury Cadbury, founded by John Cadbury in 1824 in Birmingham, England, had also grown through mergers and demergers. When the Kraft Foods on phratry 7, 2009 do its first indicative takeover bid for Cadbury, it was rejected stating that it undervalued the company.It was rejected again on November 9, 2009 before t he Cadbury agreed Kraft after open up a formal, hostile bid valuing the firm at ? 9. 8 one thousand million on 19 January 2010. Pre-acquisition Ownership of the company was 49 per cent from the US, condescension its UK listing and headquarters. Only 5 per cent of its shares were owned by short-run traders at the time of the Kraft bid. The Response The acquisition of Cadbury faced far-flung disapproval from the British public, as well as groups and organizations including trade union, Unite.Unite estimated that a takeover by Kraft could put 30,000 jobs at risk. Controversially,RBS, a bank 84% owned by the United Kingdom Government, funded the Kraft takeover. The Challenge The challenge for Kraft was how to buy Cadbury when it was not for sale. Not lonesome(prenominal) was Cadbury not for sale, but it actively resisted the Kraft takeover. Its first act was to blur the 745 pence-per-share offer unattractive, saying that it fundamentally undervalued the company. The team made clear that even if the company had o succumb to an unwanted takeover, almost any separate confectionery company (Nestle, Ferrero and Hershey) would be preferred as the buyer. In addition, Lord Mandelson, then the UKs business secretary, publicly tell that the government would oppose any buyer who failed to respect the historic confectioner. why Cadbury? * To extend the business Location, markets, globalization * Change competitive structures consolidation, remove competition, economies of scale of measurement * Improve business capabilities Access better technology, stimulate innovation have a bun in the oven AcquisitionA few months after Kraft acquired Cadbury in an $18. 9-billion hostile takeover,Sanjay Khosla, the head of Krafts trading operations in developing markets, called the merger a wedlock made in heaven. Not everyone at the Indian company impart agree certainly not the 20-odd senior executives across functions such as supply chain, sales, legal and finance who have r esigned since the integration began.The nub of the problem, though, is that the Cadbury side of the operation feels it is not getting the attention it deserves for its dominant position in the Indian market. Revenues grew by 27% in 2010, making India one of the fastest-growing operations for Kraft globally. And Cadbury brands account for over 90% of revenues of roughly Rs 2,500 crore. Growth in the current year is expected to be even higher. Kraft, on the other hand, hasnt focused on India in the past, and is now trying to make up for lost time by riding on its more sure-fire ally.