Kraft acquired Cadbury for $19.7 billion in 2010 to become the global leader in confectionery. Cadbury was founded in 1824 in Birmingham, England and Kraft was founded in 1903 in the United States. The acquisition allowed Kraft to enter new emerging markets and gain market share globally. Kraft expected cost savings and synergies from combining the companies' product portfolios and global operations. While some criticized the high price, Kraft executives believed it was necessary to outbid competitors for Cadbury.

1. Kraft and Cadbury
Acquisition
Presented by
Hemanth K Shenoy G

2. Cadbury
• Started by John Cadbury
• In 1824 Birmingham England.
• Head quartered in Cadbury house in the Uxbridge business park in
Uxiberge, London
• Started production In 1905
• In 1969 Cadbury group merged with Schweppes
• Taken over by Kraft foods on 19 Jan 2010

3. Kraft food
• Kraft was founded in 1903 as J.L. Kraft & Bros.
• After a number of mergers and acquisitions J.L. Kraft & Bros became
Kraft General Foods.
• In 1995, during restructuring, Kraft and General Foods were
amalgamated into Kraft Foods, Inc and Kraft General Foods
International became a subsidiary of Kraft Foods, Inc, which was
renamed Kraft Foods International, Inc
• In 2001, Philip Morris offered an 18.1% stake in Kraft Foods Inc. to the
public and the shares were listed on the New York Stock Exchange for
public trading. The same year, Philip Morris put forward a proposal
for a change in name to the Altria Group, Inc.

4. • The proposal was accepted and the name was changed in 2003. In
March 2007, the Altria Group spun off Kraft and, as a result, Kraft
began to trade as a fully independent company. In 2007, Kraft
acquired the Paris-based global biscuit group Danone. The acquisition
of Danone's business added a lot of diversity to Kraft...
• World’s second largest food company after Nestle with presence in
more than 150 countries
• Headquartered at Northfield, Illinois, US
• Famous Brands include - Philadelphia cheese, Oreo biscuits and
Trident gum

5. • "Cadbury has got a good price for the business and Kraft will get a
very good return. Our strategy was very clear. We put in an offer in
September, but we knew that it would take an eye wateringly high
price to get Cadbury to the table. We opted to play a slow game."
An adviser of Kraft Foods Inc., in 2010.
• "If I had a chance to vote on this, I'd vote no. [Irene Rosenfeld] thinks
it's a good deal; I think it's a bad deal."
Warren Buffet, Chairman of Berkshire Hathway, Inc. in 2010.

6. Kraft bought Cadbury for US$19.7 billion
Reason for the deal
Kraft which wanted to become a global market leader in
confectionery and chocolate markets.
Entering Emerging market through cross border Acquisitions
Overcoming Entry Barriers in New Markets
Increased Market Power
Economies of scale
Cost optimization
Expectation of better return
Knowledge sharing

7. Strategies to win the deal
• For the year ending 2007, Kraft's cash balance was US$567 million on
the balance sheet
• it reached US$1244 million in 2009 with a growth rate of 119.4%.
• This encouraged the company to think in terms of acquiring Cadbury.

8. Synergies of the deal
• Kraft's management was expecting the merger to enhance the
company's revenue as well as its global position.
• The market share of Kraft after Cadbury's acquisition would reach
14.9% in the global confectionery market, pushing Mars-Wrigley ,
with a market share of 14.5%, to second position.
• This would enable the company to offer Kraft brands such as Oreo
biscuits and Maxwell House Coffee with Cadbury's Dairy Milk
chocolate and Trident chewing gum

9. After the acquisition:
• The Kraft-Cadbury amalgamation created a portfolio of 81
confectionery and chocolate products
• For the first quarter ended March 2011, Kraft reported strong
performance as the company's net revenues were at US$12.6 billion.
• Operating income increased US$1.6 billion.
• David Brearton, Executive Vice President of Operations, said, "We're
confident we'll deliver organic net revenue growth of at least 4% to
5% in 2011." Earlier, Kraft revised its estimation of total cost saving of
US$ 750 million from US$625 million per year...

10. conclusion
• Kraft along with Cadbury are building a better and stronger team, well
• In this way mergers and acquisitions helps the companies to grow,
expand.

12. Thank You