I have really enjoyed my Mergers and Acquisitions (M&A) elective with our lecturer Scott Moeller. It has been a fascinating mix of strategy and financial analysis.
For our coursework we had to create a presentation that analysed Kraft’s acquisition of Cadbury. The acquisition was big news at the time as Cadbury is an iconic British brand and the bidder, Kraft was an American company.
We believed that Cadbury’s strategy to the acquisition was to gain as much value for shareholders as possible by negotiating the best possible price. The Cadbury board did little to try to defend the takeover and retain their independence.
Some people argue that Cadbury was sold too cheaply and some people thought Kraft paid too much. To us it seemed like a good deal for both parties; Cadbury shareholders achieved almost a 50% takeover premium which is above the typical 20-40%. Kraft used the acquisition to facilitate the subsequent split into Global Snacks and North American Grocery businesses, that will in theory unlock more value from Kraft shares in 2012.
Perhaps M&A does not have to be a zero sum game…
Thanks to Dio, Omar, Richard, Tim and Yaschica who were co-collaborators on this presentation.