British confectioner Cadbury has agreed to a takeover by US food giant Kraft, making the new firm a global market leader in food and confectionery. The deal is worth 13.1 billion euros.
Marking the end of a bitter war which started with a hostile bid back in September, the British confectioner, Cadbury, finally accepted a 13-billion-euro takeover by the American company Kraft today. The move makes Kraft the biggest global confectioner and raises questions on the vulnerability of British industry as a whole.
After describing the initial offer as “derisory,” Cadbury’s chairman Roger Carr, accepted the Kraft’s improved bid which went from 770 to 840 pence-a-share. Kraft, the maker of Oreo cookies and Ritzs crackers, will pay 500 pence in cash and offer 0.187 new Kraft shares for each share of Cadbury. In addition, according to a statement released by Kraft, “Cadbury shareholders will be entitled to receive 10 pence per Cadbury share by way of a special dividend."
The deal brings “a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of USD 100 million,” the statement says. The group will take the leading position in developing markets such as Brazil, Russia India, China and Mexico.
The bid will also help lower costs, "Kraft Foods believes a combination with Cadbury will provide the potential for meaningful cost savings and revenue synergies from which Cadbury security holders will benefit," the statement added.
The takeover marks the end of 186 years of history of the British maker of Diary Milk chocolate, Trident Chewing Gum and other brands like Crunchie, Fudge, Flake and Wispa. Cadbury, the world's second biggest confectioner behind Mars, employs more than 39,000 staff in 45 countries around the world and 6,000 within the UK.
British national pride hurt by bid
Cadbury had become an industrial icon in Britain; a country which has been facing foreign takeovers in recent years. Leading national companies such as Jaguar Land Rover, Boots, Corus and Scotish Power have been sold in similar circumstances to foreign companies.
News on the bid hurts British patriotic pride, as Cadbury’s employees and consumers lamented the news that a national brand has been swallowed by a US giant. In Birmingham, the company’s home, the feeling of loss was particularly strong.
"It is history, and what is England without its history?" Janet Wright, a 59-year-old machine operator, who started work at the Cadbury factory at the age of 15 told Reuters.
British Prime Minister Gordon Brown said he wanted to protect British investment and jobs at Cadbury, illustrating the political sensitivity of the deal in an election year.
"The one thing I want to say is this: we are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained. And we are determined, of course, that at a time when people are worried about their jobs, that jobs in Cadbury can be secure", the Prime Minister was reported as saying.
Cadbury has been in Bournville since 1879 and the sense of community remains strong there, compounding the fears and disappointment felt by the workforce.
Felicity Loudon, a member of the fourth generation of Cadbury's founding family, said the deal was a tragedy. "I think my grandfather and great grandfather and great, great grandfather would all be turning in their graves. I think the idea that Cadbury could be anything but British would be just a horror story to them," she told Reuters.
Date created : 2010-01-19