Cadbury melts under heat of £12bn Kraft offer

In a statement announcing its offer, now recommended by the Cadbury board, Kraft said it had given assurances to Cadbury that existing contractual employment rights, including pension rights, of all employees will be fully safeguarded. The combination of the two companies would, it said, "augment the world-class capabilities of both Kraft Foods and Cadbury by employing a 'best of both' approach, from sales and marketing to distribution and management. In particular, it went on, opportunities would be created for Cadbury employees and managers. However, despite the assurances, detractors suggest that to leverage value from a deal that has cost Kraft considerably more than it first offered, there may need to be casualties among Cadbury's 46,000 staff, 5600 of them in the UK. Kraft Foods said it believed a combination with Cadbury would provide the potential for "meaningful cost savings and revenue synergies" in creating "a global leader in the global foods and confectionery sector". Among the advantages of the merger, Kraft Foods believed the new entity represented "a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of $100 million." Kraft Foods and Cadbury have a highly complementary geographic footprint, and will have a leading position in developing markets, including in Brazil, Russia, India, China, and Mexico, it went on. The combined Group would benefit from important additional scale in the consolidating confectionery segments and have best-in-class infrastructure in both traditional and instant consumption routes to market. Commenting on the offer, Cadbury chairman Roger Carr, who had repulsed earlier advances, said: "We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world. We will now work with the Kraft Foods' management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees." Kraft chairman and CEO Irene Rosenfeld said she had great respect for Cadbury's brands, heritage and people and believed they would thrive as part of Kraft Foods.