Cadbury selling chocolates based drinks His sons took the business into the big time building

the Bourn ville development some 45yrs later Cadbury began making the milk chocolates in 1897 & dairy milk in 1905.Thecompany made its first major takeover in 1921 buying rival Fry- another landmark soon followed with production of its first filled egg product in192 being of its staff, setting new standards for working and living conditions in Victorian Britain. By the mid-1930s, more than 100 acres around the Bourn ville factory were devoted to recreation. When Cadbury bought the drinks firm Schweppes in 1969 it became powerful force in the global food industry It sold its drink interest-now the Dr Pepper Snapple company in 2008 Kraft foods It started in 1903 with a capital $65 Started as a wholesale cheese business in Chicago Mr. Kraft was on the brink of revolutionizing food manufacturing, not only in Chicago, but around .the world..1916, Kraft was granted a patent for what became known as process cheeseIn1920, Kraft entered the Canadian market by purchasing Mac Larens Imperial Cheese Co. Ltd 1945, the company name changed to Kraft 2000, acquired Nabisco Holdings and combined the two food giants to become Kraft Foods Inc. 2001, Kraft stock began trading on the New York Stock Exchange under the symbol KFT. 20 (KFT) replaced American International Group Inc. (AIG)in the Dow Jones Kraft and Cadbury: How they compare Kraft: the world's second-biggest confectionery company will form part of the world's second- largest food company. Kraft currently manufactures and supplies about 40 food brands across the world, ranging from confectionery products such as Oreo biscuits and Toblerone to Kenco coffee, Philadelphia cream cheese and frozen pizza. Cadbury sells chocolate, sweets and chewing gum around the world. Chocolate brands include its signature Dairy Milk bar, as well as Trident chewing gum and Halls cough sweets Why merger After the Second World War, Cadbury joined with US drinks giant Schweppes in the 1960s as it looked to expand overseas, touted as a possible buyer for Cadbury ever since it demerged its US soft drinks ier, Cadbury lost its status as global confectionery leader after Mars paid $23bn for

Wrigley's global business As per Kraft CEO, Irene Rosenfeld, combination of these two companies will increasing lycon solidation in the confectionery industry and standalone Cadbury has limited opportunities for value creation. Kraft would also benefit from Cadburys broad geographical reach, in particular its strong position in the developing Indian and Mexican markets Cadbury would profit from Krafts extensive distribution network in Russia, China and Brazil, according to Rosenfeld Kraft and Cadbury: Kraft and Cadbury: Biding First Bid of 10.2bn ($16.7bn) on 7th Sep was rejected unequivocally by Cadbury Initial offer seems undervalues to Cadbury Cadbury Said Mars was paid 19.5 times EBITDA for Wrigley in May 2008, and arguably Cadbury has much more profit growth potential than Wrigley had at that time. This leads Kraft to go public with the bid in order to encourage and further the process. Shares of Cadbury soared 35 per cent at the start of London trading on the news Kraft and Cadbury: Biding First Bid of 10.2bn ($16.7bn) on 7th Sep was rejected unequivocally byCadbury Initial offer seems undervalues to Cadbury Cadbury Said Mars was paid 19.5 times EBITDA for Wrigley in May 2008, and arguably Cadbury has much more profit growth potential than Wrigley had at that time. This leads Kraft to go public with the bid in order to encourage and further the process. Shares of Cadbury soared 35 per cent at the start of London trading on the news U.K. patriots are horrified at the thought of a huge American corporation taking over a British institution with a proud, independent 186-year history This difference is partly accounted for by variations in local laws: In the U.K milk chocolate must contain at least 20 percent cocoa solids, while in the U.S. the percentage can be as low as ten. Hershey's also says it tailors its Cadbury recipes to American tastes for a sweeter product. Chocolate fans are warning that Kraft's history of making what they call "plastic cheese" spells doom for Cadbury's iconic, rich, creamy Dairy Milk bars Second Bid of 11.5bn ($19.5bn)

about$19.5 billion (11.5 billion pounds) after frantic last-minute talks broke an impasse over price. Kraft's sold its North American pizza business for $3.7bn to Nestle earlier this month to help raise the funds to pay for the Cadbury deal Deal will make worlds largest chocolate maker, 2nd biggest gum producer

Scotland was prepared to lend money to Kraft to fund the 11.5bntakeover bid The company has given no specific assurances over the future of 4,500 UK jobs. Cadbury board has agreed to Kraft's improved offer of 840 pence ($13.78) per Cadbury share As per the revised offer Kraft would offer 2,000 pence in cash and 0.7496 new shares -Cadbury combination will create a portfolio with more than 40confectionery brands, each with annual sales in excess of $100 million US food major Kraft Foods today said it required only 50 per cent support from Cadbury shareholders to take over the British confectioner. British Prime Minister Gordon Brown pledged to "do everything we can" to secure jobs at chocolate maker Cadbury, the day after it accepted a takeover bid from US giant Kraft Foods Kraft Foods sealed a friendly deal to buy British candy maker Cadbury for about $19.6 billion (11.5 billion pounds) after frantic last-minute talks broke an impasse over price. Cadbury board has agreed to Kraft's improved offer of 840 pence ($13.78) per Cadbury share As per the revised offer Kraft would offer 2,000 pence in cash and 0.7496 new shares for each Cadbury ADS (American Depository Shares Kraft-Cadbury: Making Acquisitions Work Most acquisitions don't deliver the expected results, according to RHR Intl'sresearch. Here's how both companies' leadership can boost the chances forsuccess After months of negotiations, Kraft (KFT) announced last month that it would acquire U.K. confection giant Cadbury (CBY) with a revised bid of $19.5 billion. The acquisition of Cadbury by Kraft will generate a joint portfolio of more than 40 confectionary brands, each with annual sales in excess of $100 million, essentially creating the world's biggest confectionary company. Both Kraft and Cadbury have a lot at stake to make this deal work. Statistically, deals this complex have a high rate of failure. In fact, research conducted by RHR International found that70% of acquisitions fail to deliver the expected results. Despite the discouraging data, there is much the leadership teams at both Kraft and Cadbury can do to put the odds in their favor. Here is a look at the immediate challenges and what leadership at each company can do to mitigate them. The negotiation process was hostile. Cadbury declined Kraft's initial offer. Compounding the issue was that the dialogue (which was hostile at times) between the two companies played out in the news for months prior to inking the final deal. Fence-mending will need to take place before any real integration can begin. They are iconic brands that have long pursued different positioning.

Corporate and national pride behind both companies is strong. For Cadbury, coming to terms with the fact that it may have to merge some of its identity with Kraft could be especially difficult. (Let's face itCadbury is nearly as important to British culture as the Beatles.)Although this issue is largely a marketing/positioning question, it will have impact on there action of both organizations to the acquisition. Perceived dominance. Cadbury executives might assume that Kraft will adopt a dominant approach. Kraft will have to make their intentions with Cadbury clear as soon as possible to avoid unnecessary speculation. There is a learning curve. Kraft purchased Cadbury to break into emerging markets, and it will take Kraft some time to learn the nuances of working in those markets. Tough decisions are inevitable. Because Kraft borrowed heavily to buy Cadbury, it may be focused on revenue in the short term. Some difficult decisions could be on the horizon. Making the Deal Work Putting the challenges aside, the first 100 days after a deal is announced can determine the success or failure of the acquisition. In this situation, one of the best strategies to bring the twoteams together is to identify common goals. Experience shows that the more quickly individuals from both companies get to work together on common projects with common goals, the better the integration will work.At the same time, management must make quick, yet considerate, decisions on divisive issues. There has already been speculation around pending layoffs at both Kraft and Cadbury, which diminishes productivity at all levels. Management will need time to determine the best blend of talent, but it is a top priority and must be executed swiftly so that people can move on as soon as possible. At first glance, Kraft and Cadbury appear to be very different companies. But the reality is that they have much in common; after all, they are both consumer-product companies that specialize in confection and packaged foods. The leadership team can capitalize on this by having talent from both organizations work jointly on projects. This will encourage employees to focus on their similarities, rather than their differences. Finally, employees at Kraft and Cadbury most likely have preconceived notions about the other based on what they have read in the news or heard through industry chatter. It is essential that the

leadership team takes the time to discuss the differences in culture sooner rather than later, so that they can focus on similarities. Our experience shows that these differences begin to pale very quickly if they can be addressed early on. Challenge to Kraft's Leadership To be successful, Kraft needs to have an open and honest dialogue with Cadbury. This will give people a realistic understanding of what is going to happen, allowing them to make informed decisions about future prospects. Building trust is the only way to prevent the defection of talented people. Kraft will face an immediate disadvantage if Cadbury's top talent leaves because no one knows the details of making a company successful better than those who had a role in it ssuccess. As the acquirer, Kraft also has the responsibility to provide a detailed road map for integration. This will ensure that everyone understands the process for joining the companies, which will free up the leadership team to address hidden issues. The plan should provide guidance on the effectiveness of executives and managers, the performance of work units and processes, and the management of organizational change. Finally, Kraft will have to unite the two companies under one vision. Communications programs that support the new vision must be planned, initiated, and sustained, and employees that support the vision should be rewarded. Executives and work units must be redeployed where they will be the most efficient. Departments will have to be restructured and processes redesigned in order to align with the new company. A system should be put in place for development of team effectiveness, so that teams are cohesive. Conflict-resolution methods must be developed to ensure quick and effective solutions, while workforce standards are sharpened and common business practices established. Adjustments to the culture should be made when necessary. Challenge to Cadbury's Leadership Integrating after a merger or acquisition is challenging for any organization, even under the best of circumstances. But after the deal is done, it's critical for leadership of the acquired company to publicly embrace the acquisition and show enthusiasm about the future. By focusing on the benefits of the acquisition, Cadbury executives will be better equipped to communicate the value that Kraft brings to the brand. Senior executives at Cadbury will need to take symbolic steps to demonstrate their openness tothe merger. This might be in the form of meetings, handshakes, companywide memos, public speeches, and even positive quotes about the acquisition in the media. Ultimately, Cadbury should be proud of its accomplishments over the years. Companies become acquisition targets because they have a reached a high level

of success. Executives can retain that pride while still keeping other emotions in check. One thing is for certain: There is no room for egos during the integration process. While there are many challenges to overcome on both sides of the Kraft-Cadbury deal, strong leadership can help to smooth the process. Executives from both Kraft and Cadbury must remember that if the integration is successful, it will be a boon to both the companies, and to consumers. Guy Beaudin is a senior partner with RHR International, an organization of management psychologists and consultants who work closely with senior executives to accelerate individual, team, and business performance.

Why Kraft Remains Delectable As a standalone company, meaning without Cadbury, Kraft was and is a big force. After all, it has an excellent name, excellent shelf space in retail chains and many of its products such as Oreos and Mac & Cheese are a must have in many households, particularly in North America.

But the addition of Cadbury does have the potential to be a sizable positive for the company and its present shareholders. The reason: Cadbury is a major player in candy and gum and its addition to the Kraft arsenal will allow the combined company to have an even a broader reach around the world.

Also, when two companies of this size embrace there is a big chance to generate cost savings. Expect to hear more about that in the short term. In the release, the company indicated that the deal could add about a nickel to earnings in 2011.

Another attractive feature is that from an earnings standpoint, in all three of the last reported quarters the company has exceeded Wall Street's expectations. This too is a positive and could draw additional attention to the shares. In its fourth quarter Kraft is expected to earn 44 cents per share, and there could be upside to that number. Management will likely be doing everything it can to make sure that positive news keeps coming, knowing that its under the spotlight due to the combination.

The Activist Angle It was recently reported that Pershing Square Capital Management accumulated a 2% stake in the company. The fact that the activist firm is involved in Kraft's stock means investors can expect William Ackman to keep an eye on management and make sure that it has the common shareholder's best interest in mind.

You may remember that Ackman and Pershing Square were involved in a number of other high profile stocks including Wendy's (NYSE:WEN), McDonald's (NYSE:MCD) and Target (NYSE:TGT), where Ackman had pushed the discounter to unload its credit card portfolio.

The Bottom Line While it's great that Kraft and Cadbury are getting hitched, Kraft was a good value even without the pickup. Its recent earnings beats and the fact that it trades at only 13.1 times the 2010 estimate are very attractive features. This is ultimately a $40 stock. (Learn more about mergers, see: The Merger - What To Do When Companies Converge.)

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By Glenn Curtis

Glenn Curtis started his career in the 1990s as an equity analyst for a regional firm in New Jersey. There, he covered companies in the technology, entertainment, and gaming industries. Curtis has since worked as a financial writer at a series of both web and print publications, including TheStreet.com and Registered Rep Magazine. He has held his series 6,7,24, and 63 securities licenses.

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