Table of Contents
1.1 How and why Kraft identified Cadbury as a potential partner?2
1.2 Expected benefits2
1.3 Synergies for both companies involved?3
1.4 The risks associated with the choice of acquisition as an approach to this particular ‘partnership’4
1.5 Feasible alternative?5
Involvement of National and corporate cultures6
Critical Evaluation of both the companies about this Partnership6
Involvement Of the Government6
Four Key Benefits7
Effect on Shareholders8
Four aspects of doing business Internationally10
Benefits of these aspects11
Kraft & Cadbury
The following analysis has been made about the merger of Kraft and Cadbury, to find out that are they both potential partners and how will they survive in the long run. What might be the risks for both of the companies that they might face after this merger? What is the role of the government in this merger? What is the impact on the shareholders, what are their thoughts about it and is it a successful merger or not. Other than Kraft and Cadbury four aspects of doing business internationally has been discussed and their influence in an international business career.
1.1 How and why Kraft identified Cadbury as a potential partner? On 19th January 2010 Kraft the American Giant, acquired Cadbury the most popular and one of the most selling brand in chocolates for $11.5bn. The reason for Kraft to identify Cadbury as its potential partner and even after Cadbury rejected its first bid on 7th September 2009, and then came up with a higher bid, was that Kraft wanted to bring in the most loved British Chocolates to USA, because the chocolates that America produces are only loved by American’s and are not so loved around the world, while they targeted the British company because they make better chocolates plus they wanted to get into the British market and to get into the British market remaining into the food industry they could not identify a better option than acquiring Cadbury by merging these two companies one they capture the British market of dairy food plus they introduce their products into Britain and the Cadbury products into USA having the plus points of both cultures. (BBC News, 2012)
1.2 Expected benefits
Kraft is the second largest Food beverage company in the world, which produced revenue of 49.2 billion USD in the year 2010 (Kraftfoodscompany, (2011) and is operating in more than 150 counties worldwide and has an Employee number of around 100,000. Where as Cadbury on the other hand is the second largest Confectionary Company in the world, which produced revenue of 5.38 billion USD in the year 2008 (Cadbury annual report, 2008) and has a very strong hold in Asia Pacific and Latin America and has an Employee number of around 70,000. When these two giants combine, one American Giant and other British Giant, they both can conquer the food industry if they both are managed well. In 2010 Kraft already made revenue increase of 0.7 billion USD from 2008 to 2010 after the take over of Cadbury (CNN, 2011). Kraft and Cadbury can both work very well and can avail a lot of benefits from each other provided that both them work together, because Kraft has its own management too large in scale and Cadbury as well.
1.3 Synergies for both companies involved?
After the merger of Kraft and Cadbury, both companies are expected to have revenue synergies and have an increase of the net revenue of up to 5% or more. They are targeting the long-term output for it. Which as a result will increase the net revenue. The combined company (Kraft and Cadbury) is targeting to increase their per share cost in 2011 of approximately $0.05 and on the basis of cash. These two companies combined can make a lot of revenue. (Parliament publication, 2012)
Other than that Cadbury...