Cadbury Take Over by Kraft Final Copy

8/8/2019 Cadbury Take Over by Kraft Final Copy

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Kraft is the largest food company in the United States and holds the

number two position worldwide, behind Nestle.

The firm has two main operating units-Kraft Foods North America

and Kraft Foods International.

Kraft's brands bring in more than $1 billion in revenues each year.

The company holds the top global position in 11 product categories.

Kraft Foods' products are made at more than 220 manufacturing

facilities around the world and are sold in more than 140 countries


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1824 - John Cadbury opened in Birmingham.

1831 - Started manufacturing drinking chocolate and cocoa.

1854 - Received the Royal Warrant as manufacturers of chocolate and cocoa

to Queen Victoria.

1873 - Cease the trading of tea.

1878 - John Cadbury's sons Richard and George acquired the Bournbrook estate.

1879 - Renamed the Bournbrook estate to Bournville and opened the factory.

1905 - Cadbury Dairy Milk, was launched.

1919 - Merger with J.S. Fry & Sons Limited, another chocolate manufacturer.

1969 - Cadbury and Schweppe merged to form Cadbury Schweppes plc.

1948 - Operation began in India.

1965 - Pioneered the development of cocoa cultivation in India.


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2003 - Adams Confectionery was acquired.

2007 - Announced the closure of the Keynsham chocolate factory, formerly part of Fry's.

2008 - Demerged the Americas Beverages(Schweppe) business and created Cadbury plc.

2009 - Kraft Foods made a 10.2 billion takeover bid for Cadbury, offer was rejected, with

Cadbury claiming that it undervalued the company.


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POPULAR BRANDS IN INDIAC

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The premium implied in Krafts initial proposal was low and

has since been eroded

KraftSince Kraft made its

initial proposal, its

share price has fallen5%, reducing thevalue of its offer by3%.

-5%Krafts share price

-3%Value of the offer

Cadbury/marketIn the same period,

equity markets and

share prices ofCadburys peershave risensubstantially andCadbury hasannounced itsstrong results.

+7%Cadburys share price

+11%Cadbury peer group


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Kraft and Cadbury actions in relation to the Offer to

date

y On 28 August 2009, Irene Rosenfeld, Chairman and Chief Executive Officer of

Kraft, met with Mr. Carr, following a request for such a meeting from Irene

Rosenfeld. At this meeting, Ms. Rosenfeld proposed a business combination

between Cadbury and Kraft.

y Kraft was prepared to offer 300 pence in cash and 0.2589 new Kraft Shares per

Cadbury Share. The possible offer valued each Cadbury Share at 755 pence.

y After the Board had given Krafts proposal careful consideration, Mr. Carr sent a

letter to Ms. Rosenfeld informing her that the Directors rejected Krafts unsolicitedproposal on the grounds that it was unattractive and fundamentally undervalued the

Group.


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On 7 September 2009, Kraft released a press announcement in accordance with

Rule 2.4 of the City Code setting out the terms of a possible offer for Cadbury andMs. Rosenfeld addressed a letter to Mr. Carr asking him to reconsider Cadburys

rejection of the possible offer.

On the same day, Cadbury released a response statement confirming Cadburys

rejection

On 9 November 2009, Kraft announced its firm intention to make the Offer in

accordance with Rule 2.5 of the City Code.

On the same day, Cadbury issued an announcement stating that the Board had

emphatically rejected the Offer and that it recommended that Shareholders alsoreject the Offer.

On 4 December 2009, Kraft formally made the Offer by posting the Offer Document

and filing the US Offer Document with the SEC.


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KRAFT FOODS INC. 1st PROPOSAL OF COMBINATION

WITH CADBURY. On 7 September 2009, Kraft Foods announced that they sent a letter to the Board of

Directors of Cadbury plc to discuss the possibility of combining two companies.

Although the Board of Cadbury plc has rejected this proposal, Kraft Foods is

committed to working toward a recommended transaction and to maintaining aconstructive dialogue.

Kraft Foods is proposing an offer for Cadbury of 300 pence in cash and 0.2589 new

Kraft Foods shares per Cadbury share.

This values each Cadbury share at 745 pence and values the entire issued share

capital of Cadbury at 10.2 billion.

The combination would build on Kraft Foods' position as a global powerhouse in

snacks, confectionery and quick meals with a rich portfolio of iconic brands


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This proposed combination would create: A company with approximately $50 billion in revenues

A global powerhouse in snacks, confectionery and quick meals with an exceptional

portfolio of leading brands

A geographically diversified combined business, with leading positions and

significant scale in key developing markets including India, Mexico, Brazil, China,

and Russia.

A strong presence in instant consumption channels in both developed and

developing markets, expanding the reach and margin potential of the combined

business.


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CADBURYREJECTSKRAFTS

PROPOSAL Kraft Foods Inc. proposed a $16.7bn billion takeover of Cadbury PLC, but the offer

was immediately rejected by the British maker of chocolate, gum and candy

Cadbury said the offer undervalued the company, and expressed confidence in its"standalone strategy and growth prospects as a result of its strong brands, unique

category and geographic scope.

Cadbury has 28.4 percent of the world gum market, Kraft has 0.1 percent.

Cadbury has a 10.3 percent share of the world confectionary market in 2008, second

only to Mars Inc. with 14.8 percent. Kraft was fifth at 4.5 percent.


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y Cadbury has a 10.3 percent share of the world confectionary market in 2008, secondonly to Mars Inc. with 14.8 percent. Kraft was fifth at 4.5 percent.

y Cadbury, nearly tripled its net profit in the first half of the year as the company

pocketed a big gain from the sale of its beverage business and chocolate

consumption rose which kraft couldnt do.

y Krafts offer completely misses the value which CADBURY has already created.

y Cadbury expected that the next phase of Vision into Action which was to

deliver improved revenue growth, enhanced profitability and higher cash

returns couldnt have been possible if kraft would have takeover.


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After months of fierce resistance, Cadbury's about-face to accept a sweetened 11.5

billion pound, or $19.5 billion, takeover from Kraft Foods Inc. forming the world's

biggest candy company

Deal will make worlds largest chocolate maker, 2nd biggest gum producer

The deal, comprising 500 pence cash and 0.1874 new Kraft shares for each Cadbury

share, is a 9 percent premium to its previous 770 pence offer and 50 percent higher

than Cadbury's market value before Kraft.

Cadbury agree $19.5 bn deal


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Buffetagainst t is deal

Buffet is the chairman of Krafts biggest shareholder- Berkshire Hathaway.

I have a lot of doubts, Mr. Buffett said, adding that he would vote against the bid

if he had the chance.

Mr. Buffett warned Kraft against overpaying for the UK company earlier this month,

and voted against its original plan to issue 370million new shares to pay for the deal.

Despite his view that Kraft paid too much, Mr. Buffett said he won't be selling his

stake in the company, best known for its cheese slices and Maxwell House coffee.

He said doing so was writing Cadbury a blank cheque because Krafts stock is

undervalued.


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The deal would be the biggest deal ever signed in the Europe.

It would benefit the shareholders of Cadbury giving higher share

prices as well as the shareholders of Kraft.

Overall Cadbury got a very good price from Kraft as said by Warren

Buffet.It would be surely be difficult for Kraft to maintain the standalone

position of Cadbury in the market.

Say bye t Cadbury and elc e Kr aft..


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THANK YOU

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Cadbury Take Over by Kraft Final Copy