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Case: Cadbury agrees, Kraft takeover bid
Story: In 2009, the US food company Kraft Foods launched a hostile bid for Cadbury, the UK-listed chocolate maker. Cadbury is a popular British confectionery company and is the industry's second-largest globally after Mars, Incorporated. It was acquired by Kraft Foods in January 19, 2010. As became clear almost exactly two years later in August 2011, Cadbury was the final acquisition necessary to allow Kraft to be restructured and indeed split into two companies by the end of 2012: a grocery business worth approximately $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 September 7, 2009 made 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 the Cadbury agreed Kraft after launching a formal, hostile bid valuing the firm at £9.8 billion on 19 January 2010. Pre-acquisition: Ownership of the company was 49 per cent from the US, despite its UK listing and headquarters. Only 5 per cent of its shares were owned by short-term traders at the time of the Kraft bid. The Response: The acquisition of Cadbury faced widespread 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 only was Cadbury not for sale, but it actively resisted the Kraft takeover. Its first act was to brand the 745 pence-per-share offer “unattractive”, saying that it “fundamentally undervalued the company”. The team made clear that even if...