An icon of British companies, Cadbury, has been bought out by the American food company Kraft. After many weeks of haggling Cadbury finally accepted the increased offer of £11.5 Billion.
Kraft had to borrow a lot of the money and now people fear they may compensate by cutting many jobs.
Professor Chris Bones of Henley Business School is an ex-worker of Cadbury. He says that Kraft may owe around £7 Billion in debt. On top of this they will probably have to pay hundreds of millions of pounds on fees to advisers and other bodies. He says that this will have a huge repercussion on their future expenditure and means there will most likely be cuts in jobs, investment, research and development and other important areas.
Many workers of Cadbury may be upset, however shareholders seem to be quite happy with the takeover as they are being offered decent prices for their shares.
Big takeovers like these are not always known to work. With Krafts heavy spending, some question the possibility of it failing. However Kraft is convinced about this move. They say that by joining the two companies they’ll be able to save a lot more money by cutting overhead costs and the like. Yet the main benefit they will get is through opening their market to where Cadbury runs and where they originally didn’t.
Source: Working Lunch, BBC. (19-01-2010)