Kraft and Cadbury Merger Analysis Essay

• Kraft Foods Inc., is the largest food and beverage company in North America and the second largest in the world. Was founded in 1903 by James L. Kraft.

The Kraft Company has been around for a long time now. Personally I believe you must have a protective firm, not allowing other companies to steal your ideas and product. This will give the firm advantage over others.

Kraft Heinz Company is currently the fifth largest food and beverage company in the world and the third largest in North America. It operates globally in producing high quality foods and beverages for consumers in more than 200 countries (Kraft Heinz Company, 2017). With its co-headquarter in Pittsburgh and Chicago, USA, the company has divided 4 big regions under the global team, which are AMEA (Asia, Middle East, Australia and New Zealand), NA (North America), LATAM (Latin America), and Europe. As it operates in the packing food industry, the company has a characteristic of having low profit margin with high volume.

In the late 1990’s and early 2000’s the food industry was struggling with weak sales and low inflation which caused waves of consolidation among some of the largest firms in the industry. In 1998 General Mills studied areas of potential growth and value creation for their company which lead to small acquisitions of other firms. Looking to further grow their company, in December 2000, management of General Mills made a recommendation to its shareholders that they authorize the creation of more shares of common stock and approve a proposal for the company to acquire Pillsbury Company, a producer of baked goods, from Diageo PLC.

The company may now be known as just Kraft Foods Group but the slogans “make today delicious” and the old statements about healthy enjoyable food still stands true. Just like everything in life, things must adapt and grow with time. So being the best food and beverage company means having healthy and delicious food.

As I mentioned above, Mondelez was created to fit a need that Kraft Foods Inc. had to increase their growth globally. Kraft Foods Inc. established their name in 2007 when they broke apart from Altria Group. Kraft became the second-largest processed food company in 2012 with annual revenues of more than $54 billion in 2012 (Gamble, 2016). However, significant growth in the company was not much different from that in 2007 when they became independent. It is the belief of the company’s upper management and board that the reason for their stagnation was due to the fact that their corporate strategy was not focused on the growth of the company.

The move has paid off, boosting internet sales by 17.2pc in the same period. Mr Davies said: "During Easter, sales of our excellent chocolate and ice cream products performed well and the Group expects it full year performance to be in line with expectations."

Brand building, consumer health and wellness, and advertising and promotions were all critical to success in the industry. Kraft’s ability to compete with lower priced snacks showed its ability to differentiate itself from other lower priced competitors.

To facilitate the valuation aspect of the analysis, free-cash-flow forecasts are provided in case Exhibit 10 for Hershey as a stand-alone entity. Most students should find it easy to calculate a value for Hershey using the discounted-cash-flow (DCF) method and industry-comparable multiples, which also are provided. As with any valuation case, students must make judgments about the appropriate capital structure, the weighted average cost of capital (WACC), sales growth, and the terminal growth rate. Once students have explored the value drivers for Hershey though sensitivity analysis, they may then evaluate the bids from both Nestlé S.A.–Cadbury Schweppes PLC (NCS) and the Wm. Wrigley Jr. Company. They will want to examine whether the bids are fair from the perspective of HFC shareholders and whether the synergies assumed by the bidders in their offer prices are reasonable.

The Kraft Heinz Business Purpose Analysis There is one thing that is guaranteed in life and in business that is change. The one thing companies can count on change is consistently taking place and companies must identify, manage monitor and control change. For instance, change is consistently taking place in the target markets, the industries, and business in general. For the business to be successful and survive despite the constant changes, companies must perform business analysis. As a result, business analytics is an important aspect of businesses like The Kraft Heinz Company (Kraft Heinz).

Industry Analysis: Cadbury Schweppes (CS) is comprised of a global confectionery and beverage company. For the purpose of this case we will maintain our focus on the confectionery business and the assessment of adding to their sugar confectionery portfolio. CS is number three in the beverage business but see the opportunity to become the largest confectionery in the world. The categories are chocolates, sugar and chewing gum. At this time Adams is the number two sized in the gum business. This industry operates on “bigger is better in confectionery”. Their strategic discussions and ambitions appear to stay true, in mentality, to this mantra. This mantra could be potentially dangerous to the business. CS had a presence in over 70

All managers need to understand where value comes from in their firm. The purpose of this analysis is to identify the financial strategy and performance of this particular publicly traded company. The process of understanding the risk and profitability of a company by analyzing reported financial info, especially annual and quarterly reports are vital to identifying the company’s overall financial performance. I wanted to analyze Coca Cola because the company has so much history and is one of the most recognizable brands in the world. I have always enjoyed researching food and beverage companies

Kraft Foods wanted to create a vision in which it would be recognized as the undisputed leader in the global market for foods, while gradually expanding onward from North America into Europe.

Analysis of the Cadbury Business The person, who created the Cadbury business, is John Cadbury in 1824. The business started as a shop in a fashionable place in Birmingham. It sold things such as tea and coffee, mustard and a new sideline - cocoa and drinking chocolate, which John Cadbury prepared himself using a mortar and pestle. In 1847 the Cadbury business became a partnership. This is because John Cadbury took his brother, which also made it a family business.

Whilst the definition of corporate governance most widely used is "the system by which companies are directed and controlled" presented by Cadbury Committee, (1992). More specifically it is the framework by which the various stakeholder interests are balanced, or, as the IFC (International Finance Corporation) states, "the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders".