Canadian Packaging

Cadbury Spurns Kraft's Overture


September 16, 2009
by Canadian Packaging Staff

Want to know the Caramilk secret? Apparently, so does Kraft Foods, who on September 7, 2009 made an unsuccessful and unsolicited proposal to purchase British candy maker Cadbury plc via a possible cash and share offer for $17 billion dollars (CDN).

While Cadbury says the bid undervalued its company, and preferred its "standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope", the Northfield, Illinois-based Kraft seemed unfazed and vowed to continue finding an option that Cadbury can not resist.

Cadbury produces some of the world’s best-known chocolate bars, including Caramilk and Dairy Milk and holds a 10.3 per cent share of the global confectionery market. It also owns 28.4 per cent of the world’s gum market including Dentyne.

Kraft, who owns many famous brands including Oreo cookies, Jell-O and Kool-Aid, owns 4.5 per cent of the world’s confectionery market and 0.1 per cent of the gum market.

As for why Kraft sought out a union with Cadbury, Irene Rosenfeld, chairman and chief executive officer with Kraft Foods explains: "This proposed combination is about growth. We are eager to build upon Cadbury’s iconic brands and strong British heritage through increased investment and innovation."

She added that adding Cadbury’s brands to Kraft’s would create a "global powerhouse in snacks, confectionery and quick meals," with leading positions in developing markets like China, India, Russia, Brazil and Mexico.

Along with looking out for it’s own financial interests, Kraft has noted that any purchase of Cadbury would help protect jobs in the U.K., while mentioning a factory in Somerdale near Bristol, England that Cadbury had previously named for closure. 

While Cadbury girds itself for further action from Kraft, they are also wary that others, like Nestle and Hershey could also enter the fray.