Cadbury was quick to rebuff Kraft Foods' friendly takeover bid, but their food fight could yet turn into a gooey love-fest. There's more than meets the eye to Cadbury's rejection: the real dispute concerns money, not the easy-to-grasp logic of merging their brands.
Several major Cadbury shareholders said they expected more from Illinois-based Kraft than the $16.7 billion offered. No rarely means no in business; it’s usually just a starting point for negotiations. So yesterday’s flat-out rejection could become tomorrow’s deal.
Kraft, the world’s second largest food company, is trying to revamp itself from a tired brand that some observers say had lost its soul to one that’s sticky sweet, and all foods to all people. It’s already partway there, with a new multi-colored flower logo (replacing the age-old industrial-looking badge), and a statement of purpose that begins, “Consumers inspire us.”
The question now is whether people on both sides of the table can agree on a menu of Oscar Mayer hotdogs, Oreo cookies, Jell-O and the iconic kids’ macaroni and cheese lunch favorite, Kraft Dinner (all from Kraft) with the likes of Cadbury’s Caramilk and Wunderbar chocolate bars and its wide range of Dairy Milk confectionary products.
Things could get tricky for Kraft, particularly if Cadbury sticks to its, um, gums (it makes Trident) because hostile takeover bids are rarely neat and tidy. On one hand, Kraft doesn’t want to be seen as irresponsible by overpaying but on the other, it doesn’t want to appear to be a corporate bully, either.
From a product level, there would be some definite synergies. If you ask any Grade 4 student, pudding and cookies are close cousins of chocolate.
Here’s betting that when all said and done, the executives from both sides will shake hands and enjoy the fig newtons of their labors.
Chocolate-covered macaroni, anybody?
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