Money Matters, Simplified.
Kraft buys Cadbury for $19bn
by Ishita Sood - January 19, 2010 - comments
Founded by John and Benjamin Cadbury in 1866, Cadbury created its first milk chocolate in 1897. After that there was no turning back. It introduced Dairy Milk in 1913 along with Milk Tray. Flake was introduced in 1920, while Creme Eggs came in 1923.
London, January 19 -- A new era awaits for chocolate maker Cadbury as American food giant Kraft has bought the London-based firm for 11.7 billion pounds ($19 billion).
The deal, which was finalized Monday night, is expected to be announced today morning.
After the takeover, Kraft plans to cut 10,000 jobs worldwide in order to slash costs and improve cash flow. Cadbury currently employs 45,000 people around the globe.
The deal
Kraft’s chief executive, Irene Rosenfeld, approached Cadbury with a 771 pence offer last week. However, now the company will be paying 840 pence ($13.70) in cash and stock, and raise its cash component to 500 pence.
Cadbury shareholders will be keeping a final dividend of 12 pence a share.
Despite Cadbury's takeover, Rosenfeld promises a desire to keep Kraft disciplined in its bidding and to maintain its investment-grade credit rating.
After the acquisition, Cadbury, one of UK's most iconic brands which closed the deal after months of speculation, will end its hostile battle with Kraft, which the two food companies faced since long.
Previous suitors for Cadbury
Cadbury had previously held merger talks with various companies. American chocolate maker Hershey, Ferrero and Swizerland’s Nestle were the possible suitors for the deal.
However, talks between Ferrero and Nestle failed in a couple of days. Hershey moved closer to making a bid, but Kraft’s brand name, market size and ability to pay for the colossal deal, made Cadbury seal the deal with the American company.
About Cadbury
Cadbury was founded by John and Benjamin Cadbury in 1866. The company created its first milk chocolate in 1897. After that there was no turning back. It introduced Dairy Milk in 1913 along with Milk Tray. Flake was introduced in 1920, while Creme Eggs came in 1923.
The company merged with Schweppes in 1969 to form Cadbury Schweppes. Cadbury is present in more than 60 countries, and made a profit of 638 million pounds in 2008.