KRAFT FOODS

Kraft Foods

[Name of student]

Kraft Foods

In 2009, US food company Kraft Foods launched a hostile bid for Cadbury, the UK-listed chocolate maker. As became clear almost exactly two years later in August 2011, Cadbury was the final acquisition necessary to allow Kraft to be restructured and indeed split into two companies by the end of 2012: a grocery business worth approximately $16bn; and a $32bn global snacks business. Kraft needed Cadbury to provide scale for the snacks business, especially in emerging markets such as India. The challenge for Kraft was how to buy Cadbury when it was not for sale (www.ft.com).

According to Griffin (2011), exactly one year after the takeover, the history of the two companies changed drastically and the results of the takeover were not what were expected by the Kraft Company. All the papers in the whole country indicated that the British lover chocolate company was going to be swallowed by Kraft which is a United States based Confectionery Company. The shareholders still had to approve the £11.7 billion takeover early in the year 2010, but this was not waited as the takeover had already completed (Bow 2010). This means that the shareholders were not well informed about the processes of taking over and hence were still waiting to approve it. Kraft Company had already paid off some amount of money for a period of six months and Bournville was to be sold with other part of the empire.

Things started worsening when the shareholders realized that the company had been taken without their full consent and hence the management of this company was to be fully taken by Kraft Company. In the year 2010 in January 12, Cadbury had encouraged its shareholders to resist the offer laid by Kraft Company of taking over Cadbury. As indicated by Griffin (2011), in September 2009, the chairman of Cadbury had publically showed his unwillingness of approving the Cadbury Company being absorbed into Kraft Company's low growth corporation business strategy. It was believed by this chairman that Kraft was low performing as compared to Cadbury and that Cadbury was heavily loved by customers all over Britain.

Kraft Company raised its stake from £9.8 billion to £11.7 billion and hence Cadbury directors caved in. this time the board of directors seeing that the amount of money has increased decided to go by the decisions of the Kraft Company. It should be noted that there had been long executive meetings in the United Kingdom since Cadbury Company's board of directors had not agreed on the price. The approval of taking over of Cadbury by the board of directors following increase of the price was not waited for the other shareholders to approve and this is what the major source of the merger's problems became (Bow 2010). The chairman and one director (Roger Carr and Todd Stitzer respectively) since they opposed the plan were given huge pay offs in order to ease their pain.

The Kraft Company was interested in taking over Cadbury because of its high performance and ...