Nestle Case

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THE

NESTLl?

TAKEOVER

01;

ROWNTREE

The NestleTakeoverof
Rowntree:
A Case Study
DANA

HYDE, Ph.D. candidate,
INSEAD, Fontainebleau,
France; JAMES ELLERT, IMD
Faculty, Lausanne,
Switzerland;
J PETER KILLING, Associate
Professor of Business
Administration,
University of Western Ontario, Canada

Against a background of weak share price behaviour and weak (although improving) operating performance,
Rowntree plc found itself subject to a Dawn Raid on its shares early in 1988 by Jacobs Suchard, the Swiss confectionery company.
This seemed a good moment to turn previous collaboration discussions with Nestle into a full-blown White Knight takeover.
However, the discussions were very friendly: complementarity in products was clearly in evidence, and Nestle saw much synergy through R and D, products, administration and sales force, leading to economies of scale.
It is a Case Study of an eminently sensible integration of two companies in a competitive business. The negotiations were conducted in a mature way; there are echoes of style here of later takeovers like the end-1990 acquisition of
Cruzcampo, the large Spanish brewery, by
Guinness.

Wednesday,

April

1.3, 1988,

10.3)

as he prepared for the meeting with his Comite du Conseil that afternoon,
Mr Maucher worried about Rowntrcc falling into the hands of one of Nestle’s major competitors.

The Chocolate Industry
‘Confectionery’
was conventionally divided into ‘chocolate’ confectionery and ‘sugar’ confectionery.
‘Chocolate
confectionery included products made with chocolate; ‘sugar’ confectionery included boiled sweets, toffees, chewing gum, and other gums and jellies. Chocolate consumption represented a stable 54% of the total
~~olume of confectionery consumption in the major
\vorld markets between 1982 and 19X’.

Markets

a.m.

‘Our offer to help remains open, Mr. Dixon, and 1 urge you to reconsider our proposals.

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