Takeover insights: Kraft & Cadbury - Justifying the Deal

This 10 minute interview in Autumn 2010 by Bloomberg with Kraft Foods CEO Irene Rosenfeld provides some useful perspectives on the strategic rationale behind the Kraft takeover of Cadbury. Obviously presented with a US business audience in mind, but still hugely useful for A2 business students (particularly AQA BUSS4) none the less…

Here is the interview. Plenty of advanced business concepts in here including:

- A transformational deal from Kraft’s perspective - it was all about growth
- Sets the enlarged group on a stronger growth route
- Extra revenue synergies once Kraft has evaluated the Cadbury business in the early months, particularly through complimentary distribution channels and through shared product innovation
- Existing Kraft shareholders were sceptical about the ability of Kraft to generate synergies from the acquisition - but Rosenfeld believes that acquisition integration is a “core competence” of the business
- Warren Buffett believed that Kraft overpaid for Cadbury - not a view shared by Rosenfeld!
- Kraft were aware that there would be a local backlash from stakeholders in the UK concerned about the change management implications of the takeover