Kraft to Take over Cadbury

Kraft to Take over Cadbury

Cadbury is to be taken over by the US food company Kraft Foods.
The board of directors of Cadbury advised its shareholders to accept an offer from Kraft valuing the company at £11.7 billion ($18.6 billion), with 60 percent of the purchase price to be paid in cash and the remainder in new Kraft shares. Cadbury’s shares are currently listed on the London Stock Exchange.
The board had rejected previous offers made by Kraft, but is recommending the higher bid to shareholders, who are expected to approve the takeover. In January, potential rival bidders like Hershey, Ferrero and Nestle ruled out bids, which meant that Kraft could go ahead and complete the deal.
Kraft is to borrow £7 billion ($11.5 billion) to finance the deal, which will create the world’s largest confectionery group, with a combined turnover of $50 billion.
The deal has angered some since it is likely to result in job losses among employees, particularly at Cadbury’s UK operations. Kraft has stated that there will be some $675 million of annual cost savings from the deal, which undoubtedly means cutting Cadbury’s workforce, currently standing at 45,000 employees worldwide. Kraft itself employs 98,000 employees worldwide.
Cadbury has been operating since 1824, when John Cadbury opened a shop in Birmingham. Brands include Dairy Milk, Flake, Crunchie, Chocolate Buttons and Milk Tray. Kraft was founded in 1903 as a cheese wholesaler. Brands include Kenco, Ritz, Philadelphia cream cheese spread, Tang, Alpen Gold, Maxwell House coffee and Oreo.