By Mike Hughlett | Kraft Foods Inc. on said it has won support from 71.7 percent of Cadbury PLC’s shareholders, giving the Northfield-based food giant control of the world’s largest publicly-traded confectionary company.
After months of hostilities between the two companies, Kraft on Jan. 19 raised its bid to more than $19 billion, and Cadbury’s board accepted, making it friendly in the end.
The transaction already has regulatory approval in the Europe, where Kraft’s and Cadbury’s operations overlap. And while it legally hasn’t closed yet, “for all intents and purposes this is a combined company moving forward,” said Mike Mitchell, a Kraft spokesman. “In effect, this is day one.”
The challenge of integrating Cadbury into Kraft will be a big one, as it is in all huge mergers. After all, the deal creates the world’s largest confectionary business, just edging out Mars Inc., which bought Chicago-based Wm. Wrigley Jr. Co. last year.
“The plan is to move quickly to develop integration plans,” Mitchell said. Within 45 days, Kraft expects to name senior regional managers for the combined companies. However, Kraft will have to figure out how to redraw some of its regions.
In the United States and some other countries, there is little overlap between Kraft and Cadbury, making integration less trying. But Cadbury has a separate regional unit for just the United Kingdom and Ireland, while for Kraft that area is part of a larger European operation.
Also, Kraft’s eastern European and Middle Eastern regions are defined differently than Cadbury’s. Mitchell said the company will listen to what Cadbury managers have to say and “apply the best of both worlds.”
With the combination, Cadbury’s chairman Roger Carr will resign. Its Chief Executive Todd Stitzer and its Chief Financial Officer Andrew Bonfield “will assist with the transition but will move out of the direct chain of command,” Mitchell said.
Heading Kraft’s integration team will be Tim Cofer, who had been president of Kraft’s fast-growing frozen pizza business. However, last month Kraft announced it would sell the pizza business for $3.7 billion to Nestle SA in order to help sweeten its bid for Cadbury.
British-based Cadbury is known for its chocolate products and – in this country particularly – gum brands including Trident and Dentyne. It does about $8 billion per year in sales. Kraft makes everything from Oreo cookies to Oscar Mayer meats and does about $42 billion in annual sales.
The Cadbury deal bolsters Kraft’s presence in overseas markets and in the confectionery business, which is growing faster than many of Kraft’s other businesses.
