cadbury and kraft....

8/7/2019 cadbury and kraft....

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History of kraftHistory of kraft

The history ofKraftgoes back to 1903, when, with $65in capital, a rented wagon and a horse named Paddy, J.L.Kraft started purchasing cheese at Chicago's Water Streetwholesale market and reselling it to local merchants. Within ashort time, four of J.L. Kraft's brothers joined him in the

business, and, in 1909, they incorporated as J.L. Kraft &Bros. Co. In 1914, J.L. Kraft and his brothers purchasedtheir first cheese factory in Stockton, Illinois. In 1915, theybegan producing processed cheese in 3-1/2 and 7-3/4 ouncetins. J.L. Kraft's method of producing processed cheese was

so revolutionary, in 1916 he obtained a patent for it and in1917 the company started supplying cheese in tins to theU.S. Government for the armed forces in World War I.


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Contd..

The success of J.L. Kraft and his company was noted byThomas McInnerney, founder of National Dairy ProductsCorporation. In 1930, Kraft-phenix Cheese Corporation (as itwas then called) was acquired by National Dairy ProductsCorporation. Kraftcontinued to operate as an independentsubsidiary of National Dairy Products Corporation for many

years, but eventually was absorbed into the operatingstructure of the parent company, which changed its nameto Kraftco Corporation in 1969 and again to Kraft, Inc. in1976.


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Few products of kraft

Velvetta is processed cheese product

manufactured by kraft food.


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Crackers and cheese handi snacks


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Dry roasted pea nuts


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Type

Public (NYSE: KFT)

Founded

Chicago, Illinois (1903)

Headquarters

Northfield, Illinois, U.S. Key people

Irene Rosenfeld, CEO

Industry

Food Processing

Revenue

US$42.201 Billion (2008))

Operating income US$3.817 Billion (2008)

Net income

US$2.901 Billion (2008)

Employees

Over 1,00,000 (2009)

Website

http://www.kraftfoodscompany.com


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History of cadbury

Cadbury, the global leader in the chocolate confectionerymarket, began in 1824 when a young Quaker named JohnCadbury opened up a shop in Birmingham. John sold coffee,tea, drinking chocolate and cocoa at his shop. Believing that

alcohol was a main cause of poverty, John hoped hisproducts might serve as an alternative. He also sold hops andmustard. Like many Quakers John had high qualitystandards for all of his products.

At that time in England, Quakers were prohibited fromattending university, since it was affiliated with theestablished church, and their pacifist beliefs kept them fromjoining the military. With few opportunities available,Quakers often went into business-related fields and/ordevoted their time to missions of social reform.


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By 1842 John was selling 11 kinds of cocoa and 16 kinds ofdrinking chocolate. Soon Johns brother Benjamin joined thecompany to form Cadbury Brothers of Birmingham. The Cadburybrothers opened an office in London and received a Royal Warrant(one of many) as manufacturers of chocolate and cocoa to QueenVictoria in 1854. Six years later the brothers dissolved theirpartnership because of Johns failing health and the death of hiswife. They left the business to John's sons George and Richard.

John devoted the rest of his life to social work and died in 1889.

Today Cadbury Schweppes is the largest confectionerycompany in the world, employing more than 70,000

employees. In 2006 the company had over $15 billion inoverall sales. In March of 2007, Cadbury Scheweppesannounced that it intends to separate its confectionery andbeverage businesses. With almost 200 years in the business,Cadbury Schweppes will continue to prosper in the comingdecades.


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Cadbury product timeline

1865 Cadbury Cocoa Essence

1865 Cadbury Cocoa Essence

1875 Cadbury Easter Eggs

1897 Cadbury Milk Chocolate

1905 Cadbury Dairy Milk1908 Cadbury Bournville Chocolate

1915 Cadbury Milk Tray

1920 Cadbury Flake

1923 Cadbury Crme Eggs

1929 Cadbury Crunchie

1938 Cadbury Roses

1948 Cadbury Fudge

1968 Cadbury Picnic

1960 Cadbury Buttons

1970 Cadbury Curly Wurly

1983 Cadbury Wispa

1985 Cadbury Boost

1987 Cadbury Twirl

1992 Cadbury Timeout

1996 Cadbury Fuse

2001 Cadbury Brunchbar, Dream &SnowFlake and so on


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Kraft food launches cadbury

takeover bid Kraft Foods has confirmed it has had an initial takeoverbid for Cadbury rejected but said it intends to worktowards a deal that would create it a $50bn food industrypowerhouse.

An initial offer valuing Cadbury at around 10.2bn($16.7bn) was rejected unequivocally by Cadbury,prompting Kraft to go public with the bid in order toencourage and furtherthe process. Shares ofCadburysoared 35 per cent at the start of London trading on thenews.

Kraft is proposing 3, or $4.92, in cash and 0.2589 newKraft shares per Cadbury share, valuing each Cadbury shareat 7.45, representing a premium of 31 per cent from theCadburys closing price Friday of 5.68.


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Cadbury vulnerable

Kraft has been touted as a possible buyer for Cadbury eversince it demerged its US soft drinks business in May last

year, leaving it vulnerable to a takeover. A month earlier,

Cadbury lost its status as global confectionery leader after

Mars paid $23bn for Wrigley's global business.

A combined Kraft and Cadbury would significantly expand

the global reach of both businesses and create synergies

worth in the region of $625m, according to Kraft chairman

and chief executive Irene Rosenfeld. $300m would beaccrued in operational savings with $200m coming from

administrative costs and $125m from marketing and

selling.


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Attractive synergies

A Cadbury merger would allow Kraft to gain a footing in thefast growing chewinggum category, where Cadbury ownsmarket leading brands including Trident and Halls. Kraft

would also benefit from Cadburys broad geographical reach,in particular its strong position in the developing Indian andMexican markets. For its part, Cadbury would profit fromKrafts extensive distribution network in Russia, China andBrazil, according to Rosenfeld.

Increasingly wereseeing consolidationintheconfectionery

industryanditsonereason why Ifeelthecombination ofthesetwo companiesisacompelling proposition,Rosenfeld said in aconference call with analysts. She added she believed astandalone Cadbury has limitedopportunitiesforvaluecreation.


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Undervalued?

Some analysts believe Krafts initial offer undervaluesCadbury. Wethink 15-16timesEBITDAisareasonable

multiple,said Bernstein analyst Andrew Wood. Marspaid19.5timesEBITDAforWrigleyin May 2008, andarguablyCadburyhasmuchmoreprofitgrowthpotentialthan Wrigleyhadatthattime.A 15 times 2008 EBITDA figure valuesCadbury at 8.55 per share.

Kraft has also vowed to save workers jobs at Cadburys UKfactory in Somerdale, Bristol which is due to close as Cadbury

shifts production to Poland.Any deal between Kraft and Cadbury would require theapproval of both sets of shareholders. Kraft is now likely tocome back with an improved offer or launch a hostile bid forCadbury. The other possibility is a counter bid by either Nestle

or Hershey or a combination of the two.


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conclusion

In conclusion we would like to say

that both the companies are major

global enterprizes..and a merger oracquisition will definitely lead to a

greater enterprize provided kraft

offers cadbury their actual worth.

Thank you.

Ayush .A. Jainand Nashra Aziz3rd sem E

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cadbury and kraft....

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