Kraft eats up Cadbury
After gunning for the Cadbury Egg maker for months, Kraft Foods -- the bearers of Oreos, Triscuits, Chips Ahoy, and of course Kraft Macaroni & Cheese -- prevailed over the British chocolate maker this week with an offer it couldn't refuse, worth more than $19 billion. The Economist seems cautiously dubious of the takeover. It says:
Received wisdom has it that three-quarters of mergers fail to create shareholder value and half actually destroy it. In such a sensitive consumer sector, the risks of a culture clash and brand destruction are high. That is what happened to Terry's, a smaller York-based chocolate company bought by Kraft in 1993. Terry's has lost visibility in Britain since production was relocated to central Europe in 2005. Something of the same could await Cadbury.
The emotions roused by the fight for the chocolate-maker go far beyond the business specifics, however. Two sensitive themes are intertwined. The first is that foreigners are buying up Britain's most famous firms, and weak sterling may exacerbate the trend. The second is the long, slow erosion of Britain's manufacturing base.
Others, including one of Kraft's own major shareholders, have come out against the deal.
Billionaire businessman Warren Buffett, whose Berkshire Hathaway is Kraft's biggest shareholder, derided the deal, saying the macaroni and cheese makers paid too much for the British candy company. According to the Wall Street Journal, Buffett reportedly told CNBC "There's a deal momentum that gets created in any transaction," he said. Kraft executives "want the deal. If you really want the deal, you'll have all the people who work for you telling you, 'Do it.'"
Some have concerns about what they describe as Kraft's reputation for cost-cutting and its potential impact on Cadbury's thousands of employees worldwide. Here's Al Jazeera's take:
Here's hoping Cadbury at least gets to keep some of its winning, Willy Wonka-like product names: Crunchie, Curly Wurly, Star Bar, Wunderbar ...
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