Lessons from the Cadbury-Kraft Takeover

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    Jessica Lee

    The Cadbury-Kraft takeover is a classic example of how a company can defend itself in a hostile M&A battle. Here are some key takeaways from this historic event:

    Engage Stakeholders

    Cadbury did a fantastic job rallying public and shareholder support by highlighting their rich British heritage and beloved brand. This shows the power of engaging all stakeholders—not just shareholders—in a takeover.

    Communicate Value

    Cadbury clearly articulated their strong financial performance and future potential, arguing that Kraft’s offer undervalued them. This teaches us the importance of effective communication in highlighting a company’s value.

    Operational Excellence

    By showcasing their growth strategies and operational improvements, Cadbury demonstrated their ability to thrive independently. Continuous improvement and strategic foresight are essential in maintaining a company’s value and deterring hostile bids.

    Defense Mechanisms

    Cadbury considered various defense mechanisms, including seeking a “white knight” and using financial and legal barriers. Being prepared with various defense strategies can significantly strengthen your position in a takeover battle.

    Lessons for M&A Practitioners

    1. Engage Stakeholders: Build broad support by leveraging emotional and cultural connections.
    2. Communicate Clearly: Effectively articulate the company’s actual value and potential.
    3. Focus on Improvement: Show continuous operational excellence and strategic growth.
    4. Be Prepared: Have a range of defense mechanisms ready to deploy.
    5. Strong Leadership: Clear vision and effective leadership are crucial.

    The Cadbury-Kraft case reminds us that M&A is not just about numbers; it’s about people, culture, and vision. What do you think about the role of emotional and cultural value in M&A? Have you seen these factors play a decisive role in your experiences? Share your thoughts!

    Peter J. Gondek

    Hi Jessica,

    This is a well-written post. I agree with the defense mechanisms that Cadbury employed in their defense of the Kraft takeover. They tried nearly everything. My takeaway from his case was that, at the end of the day, the primary responsibility of management is to maximize Shareholder Value. They tried all they could to defend against the takeover. However, when Kraft’s final offer came in, it was too good for the shareholders not to accept it. The case was an exercise in shareholder value.


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