Kraft’s M&A “dog & pony” – going overboard with rhetoric?

Kraft's post-offer communication to Cadbury shareholders

With an acquisition offer endorsed by Cadbury’s management, Kraft has set about wooing Cadbury’s investors, employees, and the UK goverment to get the final seal of approval on the deal. While we certainly endorse this swift, aggressive communication, we wonder if Kraft’s rhetoric has gone a bit overboard (especially on the jobs front) and they’ll be forced to eat their words in the future.

Kraft-Cadbury merger presentation – how did they do?

After listening to Kraft’s merger presentation to investors (available in webcast on the their web site), I would give the presentation a solid “B” grade. It certainly wasn’t emotional (in fact, you could hear the weariness in Kraft CEO Irene Rosenfeld’s voice), but you really don’t want an emotional tone in investor presentations anyway (especially when discussing mergers). It was a nice, concise presentation that focused on positives of the deal and laid out the rationale in a very clear manner.

What role does “cultural fit” play in M&A?

Cadbury Plc, Kraft Foods, and Hershey Company example

t’s not personal, it’s business. The rationale for most mergers is based on classic business theory of strategic fit, discounted cash flow models, and projected growth. As most deal development, analysis and negotiation strategy is outsourced to investment banks, it makes sense that there is a very clinical approach to arranging corporate marriages. However, most mergers fail to live up to their potential because of a critical but difficult-to-define intangible — cultural fit.

This may be a key factor in the 3-way love triangle that is now being played out between Cadbury Plc, Kraft Foods, and the Hershey Company.