A major topic in the international financial press this week once again was the takeover of British Cadbury by the US food giant Kraft. I personally find the situation very interesting since it is an extremely large deal taking into consideration that we currently have a global financial crisis and this deal is worth about $17 billion.This acquisition battle has been going on and has been of extremely high interest for the financial world for a while now, but due to UK takeover rules is coming to a determining point on Monday the 9th of November 2009. If Kraft does not make a formal offer by 5pm English time, they loose the right to make any offers for the following 6 months.
The article from the Financial Times basically just reports clearly and not very precise what is happening and why that is the case. The author included some figures and described the situation of the bidding and the two companies. Even though there is no bias and this article in not opinionated in any way, I myself find two things in this article very surprising. The first is that the author almost does not mention at all the UK takeover law is what is pushing and putting Kraft in a difficult situation now. I find that extremely important and determining for the entire process and therefore clearly see a lack of that information. The second thing is that the author clearly seems to find it remarkable that the Kraft CEO is a woman, Irene Rosenfeld, since other than the Cadbury CEO her name is in bold letters in the text. He must see that as something special which could be interpreted as a form of bias. Overall the article is easy reading but it is not too informative if one is not already familiar with the matter and story. For the information and help it gives it is rather long and could be seen as waste of space.
The article from Manager Magazin, a German financial newspaper, in my eyes is a lot better and a lot more informative for the reader without any extra complexity. It is very pleasant to read since they use a rather entertaining sarcastic language in some cases and it is very well structured. They include some figures as well as a little bit of background information and also give some suggestions on how the two companies could behave and make their moves taking Into account the framework of the deal and the legal situation England provides. One thing I have to point out Is that they also mention in a special way that the Kraft CEO is female and see this as something special apparently so the FT is not alone. Overall it is a very easy reading but very informative article which is interesting and informative reading for a broad range of people.
The third and in my eyes by far the best article about this topic is from The Guardian. It already has two bullet points right under the title which give the reader a basic but clear idea of what the matter and the problem is. The article does not just briefly describe the situation but also clearly mentions legal framework, the financials of the deal, Kraft’s situation and strategy as well as background info about both organisations. This obviously is not of interest for every reader, but in my eyes since it was cut short was very informative and interesting. The article is in no form biased or opinionated and gives everybody, even people that previously had no idea about the topic or the matter, a very good insight and entertaining story and information.
I myself see this especially at the current point in time as a very interesting topic and deal. This is an acquisition between two more or less healthy companies during a global financial crisis and it is a very big deal looking at the value. Kraft is trying to further increase its global power during the financial crisis by bringing another very strong make into their conglomerate, but they try to get it as cheap as possible.“Is the giant winning in rough weather”?
The problem they have now is the UK takeover law which does not any longer allow them to gamble slowly and approach their target in a subtle way. They had their time and now they either have to
“take it or leave it”.
This makes it a tough call for Kraft as also analysed by their main shareholder Warren Buffet. They have to make an offer where they are more certain not to get declined since now it is formal, but they still then run the risk of overpaying. The law puts them in a very difficult situation where they either win or loose but they have to make the call now, their time has run out. If Kraft would have time to keep on informally negotiating the situation would be completely different, but they now have to make their final decision. If they don’t make the winning offer they loose and have to wait, if they do not make an offer they walk empty handed. We will see today and in the following weeks how things are continuing and if Kraft is a winner in this game, but we have to always keep in mind
"Getting what you want may not make you the winner if the price you paid was too high"
Sources:
http://www.ft.com/cms/s/0/8cda0890-cb1d-11de-97e0-00144feabdc0.html
http://www.manager-magazin.de/unternehmen/artikel/0,2828,660062,00.html
http://www.guardian.co.uk/business/2009/nov/08/kraft-cadbury-takeover-deadline/print
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