Sep 8, 2009
The Chocolate Nut fudge for Labor day
The US Coffee Chocolate Giant Kraft bid for the global leader Cadbury’s over the weekend with a $16.7 billion bid over the Labor Day weekend
Bournville, where Cadbury’s originated and Cadbury’s rejected the bid which sent traders hankering for chocolate and made the stock rise 40% in anticipation. This is the first Billion dollar deal tabled in 2009 with Toblerone maker Kraft bidding for Cadbury’s across the pond. Hershey’s and Nestle can’t be white knights because of Anti trust regulations while others seem small fry. Kraft offers only 300p ($4 and 80c) in cash and 0.26 shares of Kraft per Cadbury share, leaving the UK based giant short changed.
It also recommends that the integration of distribution etc will save the combined company a further $1 billion. However, i would seem intelligent on Cadbury’s behalf to ignore the deal and walk away if they can as synergies from the deal look unwieldy, and such easy peasy pipe dreams’ to get market share in Europe and Asia overnight have not fructified earlier, niether has someone like Deutsche Bank been able to make a dent in the US
Factors like Outsourcing and Geographical sensitivities anathema to Cultural and Social integration at large need a new integrative mechanism that may make such Global M&A still infeasible. In this case one however simply feels that Cadbury’s seems to have the more successful Corporate culture and organization and if there can be other private investors to back Cadbury’s and Nestle in the domain, the likes of Kraft and Hershey’s will be faster to learn subsidiary to these far superior expressions of Organization.
Analysts of course, are also hoping for a possible joint bid by Nestlé and Hershey, allowing Nestlé to take Cadbury’s gum business to compete with Mars with Hershey taking over the chocolate operation. (NYTimes.com) Even that wouldn’t be the best as we have seen in the aftermath of the BCS, RBS, ABN saga, but AOL has split its business lines recently and that may be fair. Also, Nestle at least would well leave acquiree ops alone to be without posting unnecessary hurdles in terms of rush hour integration
Will anything save this disaster for Cadbury? Can KKR Europe please step forward?
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