Acquisation of Cadbury by Kraft Foos Djordjevic Matrosova Milovanovic Petrov Sebestyen Varvaroi 1

Topics: Discounted cash flow, Kraft Foods, Cadbury plc Pages: 28 (4763 words) Published: May 6, 2015
Mergers, Acquisitions and Due Dilligence
M&A case study

Acquisition of Cadbury by Kraft Foods
Submitted at

IMC University of Applied Sciences Krems

Master’s Program

International Business and Export Management
by

Sandra DJORDJEVIC
Julia MATROSOVA
Tomislav MILOVANOVIC
Ian PETROV
Adam SEBESTYEN
Isabelle VARVAROI

Supervisors:

Mag. Johann Aldrian, Mag. Wolfgang Aldrian

Submitted on:

25.03.2015

I

Table of Contents
Table of Contents .................................................................................................... II

List of Figures and Illustrations ............................................................................... III 1 Introduction to Kraft Foods and Cadbury and rationales for the acquisition......... 1 1.1 Kraft Foods...................................................................................................... 1 1.2 Cadbury........................................................................................................... 3 Valuation methodologies and “Football Field” valuation summary .................... 8 2.1 Discounted cash flow analysis (DCF) ............................................................. 8 2.2 Comparable company analysis (CCA) .......................................................... 13 2.3 Comparable precedent transaction analysis (CTA) ...................................... 14 2.4 Valuation summary ....................................................................................... 16 Final Conclusions and recommendations ........................................................ 20 3 Bibliography ........................................................................................................ 21

II

List of Figures and Illustrations
Illustration 1: Product portfolio ......................................................................................... 2 Illustration 2: KRFT revenue by division .......................................................................... 2 Illustration 3: Cadbury´s confectionary ............................................................................ 3 Illustration 4: CBY Revenue by Product Category ........................................................... 4 Illustration 5: Market growth rates 2003-2008 ................................................................. 4 Illustration 6: Global chocolate stail market value............................................................ 5 Illustration 7: Global Chocolate Market 2009 ................................................................... 6 Illustration 8: Annual Per Capita Chocolate Consumption 2009 ...................................... 6 Illustration 9: Regression table ...................................................................................... 12 Illustration 10: Footbal field for the EV ........................................................................... 16 Illustration 11: Enterprise bridges and share price based on the utilized models .......... 18

III

1 Introduction to Kraft Foods and Cadbury and rationales for the acquisition
1.1

Kraft Foods

Kraft Foods Group, Inc. is the largest consumer packaged food and beverage company in North America and the second largest in the world after Nestlé SA (wikinvest). The company was founded in the US in 1903 by James Lewis Kraft, who was the son of immigrants from Germany. Originally, Kraft Foods Inc. began as a cheese manufacturer (ibid).

Its headquarter, is located in Northfield, Illinois, USA. Kraft Foods Group, Inc. products are widely distributed and sold in developing markets (26%), Europe (25%) and North America (49%). (Kraft Foods Group, 2014)

The company has 22,500 employees across the U.S. and Canada and $18 billion in annual sales. Furthermore, firm was launched as a public and independent company on October 1, 2012. (ibid)
Kraft Food Inc. has 97,000 employees in more than 70 countries. It operates in two main...

Bibliography: (2008).
Kraft Foods Group, I. (2014, 12 12). Retrieved from media.corporateir.net/media_files/IROL/25/253200/KraftFoods%20Fact%20Sheet%201212
2014%202pg.pdf
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