Kraft Foods acquired Cadbury in 2010 for $19.5 billion after months of negotiations. Some key details: - Kraft is an American food manufacturer known for brands like Oreo and Cadbury is a British confectioner famous for Dairy Milk chocolate. - The acquisition gave Kraft access to emerging markets and Cadbury's strong brands. It also aimed to increase economic scale and profitability. - Kraft initially offered $16.7 billion in August 2009 but Cadbury rejected it as too low. After extensions from the Takeover Panel, Kraft increased its offer and finally secured over 75% of shares to complete the acquisition in February 2010. - Winners included Cadbury shareholders through

1. 2014
Acquisition of Cadbury
by Kraft
Sadat

2. About Kraft
Kraft Foods, a corporate America companies is known for its complicated history. It well
known product are Oreo cookies, Ritz crackers and Oscar Mayer lunch meats. Kraft Foods
Group Inc. is an American manufacturing and processing which is headquartered in Northfield,
Illinois, a Chicago suburb.

3. Kraft foods (KFT) began in Chicago in 1903 by James L. Kraft; he would literally walk door to
door selling cheese. In 1909, Kraft and his four brothers formed J.L. Kraft & Brother's Company.
In 1912, their business expanded to New York which led to their international expansion around
the world. Quickly progressing, they soon had over thirty one varieties of cheeses. These cheeses
were being sold around the U.S. due to product development and expansion by marketing. This
resulted in the brothers opening up a factory in Illinois. In 1924, the company was listed on the
Chicago Stock Exchange and changed its name to Kraft Cheese Company. Kraft foods are the
2nd
largest food and Beverages Corporation. It was formed on Dec 10th
1932 by Thomas H.
Mclnnerney.
Kraft started with ice cream manufacturing and later expanded into full range of dairy products,
enjoys presence in more than 155 countries. It has progressed dramatically over the years buying
over other companies. Kraft is an independent public company; it’s listed on the New York
Stock Exchange. It recently acquired Cadbury on 2nd
Feb, 2010, one the top companies of
United Kingdom.
About Cadbury
Cadbury, officially Cadbury Enterprises pvt Limited, is a British confectionery company
Cadbury was established in Birmingham by John Cadbury in 1824, who sold tea, coffee and
drinking chocolate. Cadbury developed the business with his brother Benjamin, followed by his
sons Richard and George. George developed the Bournville estate, a model village designed to
give the company's workers good living conditions.
The company is best known for its confectionery products, in particular Dairy Milk chocolate
introduced in 1905. Cadbury has it’s headquartered in Uxbridge, London, and operates in more
than fifty countries worldwide. Cadbury is the 2nd
largest confectionary. The company was
original known as “Cadbury Brothers Limited”. In 1969, Cadbury Brothers Limited merged
with Schweppes to form the international confectionary and beverage company “Cadbury
Schweppes”. In 1989, the company purchased Trebor Bassett, forming the UK confectionery
subsidiary “Cadbury Trebor Bassett”. 2008: Cadbury and Schweppes demerged, separating its
confectionary and drinks business. In 2009, Cadbury Trebor Bassett was renamed Cadbury UK,
listed on the London Stock Exchange.

4. Financials
Kraft
- Revenue US$40.4 Billion (FY 2009)
- Operating Income US$5.52 Billion (FY 2009)
- Net Income US$3.02 Billion (FY 2009)
- Employees 98,000 (2008)
- Cadbury
- Revenue GB£5,384 (FY 2008)
- Operating Income GB£,388 (FY 2008)
- Net Income GB£,364 (FY 2008)
- Employees 71,657 (2008)
Reasons for Kraft acquisition of Cadbury
Cadbury offered Kraft greater access to sharp growth in emerging markets making it
world’s leading chocolate sweet and chewing gum brand.
Kraft expected a better return
Knowledge sharing.
Increase it economic scale and scope.
It wants to be the leader in confectionery items.
Cost Optimisation
Increase its distribution channels
Improve the portfolio mix

5. Timeline of the Takeover
AUG 28 – Initial bid at 755 pence per Cadbury Share. The Kraft bid was 300p in cash
and 0.2589 new Kraft shares for each Cadbury share.
SEP 07 – Kraft goes public with the bid. , but its value has slipped to 745p per Cadbury
share or 10.2 billion pounds. Cadbury rejects it as undervaluing the group and
it prospects.
SEP 16 – Warren Buffett, the world's second richest man and a leading shareholder in
Kraft with a 10 percent stake, warned the U.S. food group not to overpay for
Cadbury. As it had the disadvantage of using an undervalued stock.
SEP 21 – Cadbury asks the UK Takeover Panel to make a "put up or shut up" request to
Kraft, giving it a timeframe to come up with a formal bid or walk away from
Cadbury for six months.
SEP 23 – Cadbury CEO Todd Stitzer is reported at a Bank of America/Merrill Lynch
conference as saying he saw potential benefits from a Kraft deal and discussed
valuations with investors, according to a Bank of America/Merrill Lynch note
from the conference.
SEP 25 – Cadbury's Stitzer says does not believe Kraft's offer for his company made
strategic or financial sense.
SEP 30 – UK Takeover Panel rules Kraft has until 1700 local time on Nov 9 to make a
formal offer or walk away for six months. Cadbury repeats its rejection of the
approach.
OCT 21 – Cadbury posts upbeat third-quarter trading with underlying sales up 7 percent
as it raises its 2009 target for sales and profit margin growth. The shares fail to
react as a counter bidder is seen increasingly unlikely.
OCT 22 – Nestle and Hershey report third-quarter results but neither mention any bid for
Cadbury, with Nestlé’s focus on increasing its share buyback programme.
NOV 03 – Kraft third-quarter results disappoint investors with weaker-than-expected
revenue and as it cut its 2009 sales forecast. CEO Rosenfeld says she will not
overpay for Cadbury.
NOV 09 – Kraft formalizes its bid at the same terms as the original approach -- 300p in
cash and 0.2589 new Kraft share for each Cadbury share -- valued at 717p, but
further falls in Kraft shares and the dollar made it worth around 708p.
NOV 23 – Cadbury shares hits all-time high of 812-1/2 pence on speculation of a battle
between Kraft and rivals for the British chocolate maker.
DEC 04 – Kraft posts its offer document to Cadbury shareholders starting off a two-
month fight for the British group UK takeover rules. Kraft says its bid is now
worth 713 pence a share or 10.1 billion pounds.

6. DEC 14 – Cadbury publishes its defence document, urging its shareholders to reject the
Kraft’s offer.
JAN 05 – Kraft sweetens bid with 60p more cash but cuts shares offer to keep offer price
unchanged.
JAN 12 – Cadbury gives its final official defense against Kraft bid reporting robust
trading and rejecting the bid on valuation. Ferrero pulls out, say sources to
close to the deal.
JAN 15 – Deadline for Cadbury to issue trading update.
JAN 19 – Cadbury excepts Kraft’s offer of GB£11.7 Billion ending months of Corporate
battle valuing each Cadbury share at 840 pence.
FEB 05 – Kraft had secured over 75% of the shares thus finalizing the deal.
MAR 08 – Cadbury shares was de-listed.

7. Winners and Losers
Winner 1: Cadbury Shareholders
Sep 7, 2009 the market value of Cadbury increased by 40% to £10.2 Million because of
announcement by Kraft of its intension to acquire Cadbury.
Winner 2: M&A Advisor
Most M&A advisors earn between half a percent and two percent of the deal’s value (between £5
million and £20 million)
Winner 3: Stock Market Speculation
They employ a merger arbitrage were they take two position simultaneously for example a short
position on Kraft’s share and a long position on Cadbury’s share and the difference between
these two position represents their merger arbitrage.
Winner 4: Senior Managers of Cadbury
If the deal goes ahead they are going to get a bumper exit packages. If the acquisition does not
materialise then they keep their jobs plus will also get a bonus for fighting Kraft’s takeover.
Winner 5: Senior Managers of Kraft
Increase in their salaries because salaries are positively correlation to size of the firm.
Non quantified benefits for example increase in pride, job securities.
Winner 6: Kraft’s Shareholders
They have paid over the odds because they are paying a 40% premium to the pre-September
2009 share price level.

9. Conclusion
Kraft and Cadbury have both come together for the very first time to integrate their knowledge
and legacy. Educate legacy Cadbury employees about Kraft Foods’ history, and to educate
legacy Kraft Foods employees about Cadbury’s history. Because both the companies have
preserved their past and their heritage stories, take alot of pride in their legacy. It’s crucial for
them to understand each other in-order perform better and become a market leader. Kraft along
with Cadbury are building a better and stronger team, well
THANK YOU