Stud: Kraft and Cadbury
This was quite possibly one of the most hotly contested and contentious takeovers in the history of mergers and acquisitions. In late August 2009, the CEO of pre-split Kraft, Irene Rosenfeld, met with Cadbury chairman Roger Carr to make an offer for the U.K. chocolate company. Carr rebuffed her immediately. They went back and forth over the next four-and-half months until Cadbury accepted Rosenfeld’s offer of $19.4 billion in January 2010 — a 50% premium to where Cadbury’s shares traded before Kraft’s bid the previous August.
Kraft got increased exposure to emerging markets, Cadbury gained a bigger foothold in North America, and the combined businesses generated cost and revenue synergies of almost $2 billion. More importantly, the merger allowed Rosenfeld to execute her next grand plan — splitting Kraft into two companies. While Kraft Foods Group’s (KRFT) North American grocery business has some great brands — Maxwell House, Cracker Barrel, Planters — it simply doesn’t have enough growth. Mondelez International (MDLZ), which Rosenfeld runs, has the global scale and brand strength to grow its business exponentially … at least, that was the theory.
Mondelez has hit some bumps in the road in 2013; however, its business model is very much intact. Its long-term goals of organic net revenue growth of 5% to 7% and double-digit adjusted EPS growth are both still in sight. But make no mistake, none of this would have been possible without the original merger of Cadbury and Kraft.