Cadbury brands could find different homes
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The sale of Cadbury is inevitable, but it is more likely to be broken up as brands and sold off to various buyers, according to a company insider.
Cadbury, which owns brands including Dairy Milk, Creme Egg and Trident gum, rejected Kraft’s £10.2bn offer for the company earlier this week, claiming it “fundamentally undervalued” the company.
But the move is now expected to trigger other multinationals, such as Nestlé, Mars and Hershey’s, to launch their own bids for Cadbury.
“A deal will happen, but it won’t necessarily be with Kraft. I don’t think the end game will necessarily be a straight takeover. [Cadbury] has a pretty disparate collection of fantastic local brands, many of which have natural homes elsewhere. I think we’ll see spin-offs,” the insider says.
Nestlé and Hershey’s could team up, for example, with the former taking on Cadbury’s gum business, and Hershey’s its chocolate brands to get around anti-trust issues.
But while Kraft’s initial offer has fallen well short of expectations, some observers say a higher offer should not necessarily be ignored.
Value Engineers director Anna Eggleton says that while Cadbury, with its Quaker roots, has a strong UK heritage it has become less relevant in the modern day.
The Cadbury insider adds that none of the company’s brands are “global powerhouse brands”. “You can’t call them global unless they really impact the US market.”
But it will not have escaped Kraft’s attention that last year more than a third of Cadbury’s revenues came from emerging markets, with India and Mexico among them. And its potential for further growth can not be underestimated.
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Readers' comments (5)
Anonymous | Wed, 9 Sep 2009 11:40 am
I see Cadbury as a UK brand and I think that's important. If the product stays the same I'll probably still buy it but the brand itself will be seriously devalued in my mind by any of the above named companies taking over.
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Anonymous | Wed, 9 Sep 2009 1:32 pm
I think in this day and age you can't have your cake and eat it. Companies are struggling to stay afloat with the economic downturn and nationalistic legacies mean nothing at the end of the day. As you rightly mention the product will stay the same and that's what's key. Look at Jaguar? British but was bought by Americans.
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David Jenkins | Wed, 9 Sep 2009 5:00 pm
I'm Irish and I love Guinness. Of course I was disappointed when Diageo bought the brand but at least it is still manufactured on the emerald isle! I love the black stuff and what it stands for.
I'm sure those loyal to Cadburys and the Midlands itself will still buy the choccy if even it's owned by a big company.
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Anonymous | Wed, 9 Sep 2009 10:56 pm
Cadbury's bought Fry's an then merged with Schweppes and then with Trebor Bassett who were already a merger and then bought Adams. Schweppes also bought lots of brands along the way as it's all about buying market share of the confectionery market so they can say they are number one to their share holders! The difficulty selling Cadbury's is that it's so big the monopoly board will block most offers so dividing it up seems like the best way of making a lot of money quickly!
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EMMA | Fri, 11 Sep 2009 12:33 pm
Mergers and acquisitions are rarely successful, I agree with the above - it's all about claiming a 'number one' position.
It is possible to be small and profitable.
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