After four months of negotiation and fierce resistance and bitter statements, Cadbury accepted the improved $19.4 bln bid of Kraft, a deal that would turn the US-based candy maker into the world’s largest confectioner. However, in order to move ahead with the merger, Cadbury must divest its Polish and Romanian chocolate confectionary businesses.
In June 2007, Britain’s Cadbury acquired Romanian sweets group Kandia Excelent. But how much was the entrance fee at that time? Cadbury picked up 93.2% in Kandia Excelent from the majority shareholders of the company, Axis Investments and Meinl Bank, for 326.4 million lei or €99.4 million in two deals at the Bucharest Stock Exchange.
Almost two years on, Cadbury Romania is for sale. The European Commission has cleared the acquisition of Cadbury by US candy maker Kraft Foods. However, the Commission’s decision is conditional upon the divestment of the Polish and Romanian chocolate confectionary businesses of Cadbury.
Who would be the buyers? “Strategic, most likely investment funds”, Ioana Filipescu (photo), managing director with Raiffeisen Investment Romania told Wall-Street, adding that acquisition process for Cadbury’s Romanian operations might already be underway.
“These transactions don’t happen over night, the negotiation process is long. They don’t leak to the media out of the blue. An acquisition process for Cadbury Romania may already be underway as we speak,” said Filipescu.
A candy maker is certainly an attractive target for takeover, as the confectionary is one of the attractive industries even in crisis. “Confectionary business is a growing field and definitely an attractive industry regardless to the economic conditions”, the representative of Raiffeisen Invetsment said.
It is too early to say if the acquisition price will be around the 2007 level, Filipescu added. “It wouldn’t be right to make estimations starting from the price of the last acquisition, things have changed, the market has changed. There are a lot of things to consider, the success rate of Cadbury’s brands for instance,” Filipescu explained.
Over the past two years, the confectioner has changed its management three times. After the takeover of Kandia-Excelent, Sorin Alexandrescu who headed the company for two years announced his resignation. He was replaced by Jose Bonito, and shortly after by the incumbent chief executive Martin Drane.
Kraft Foods: Too early to say what the future holds for Cadbury Romania
Contacted by Wall-Street, Mike Mitchell, spokesperson of Kraft said that at this point it is too early to say what US confectioner plans to do with Romanian operations of Cadbury.
“As I said earlier, we believe that the two companies complement each other. A Kraft-Cadbury combination will pace up the growth of the company and raise exposure to a range of categories, regions and distribution channels. It will also generate cost reduction”, said Mike Mitchell.
Kraft is one of the world’s largest food and beverage companies with annual revenues of around $37 billion, and employs 100,000. It has over 180 production units across the world. The company is a member of the Dow Jones Industrial Average, Standard & Poor's 500, the Dow Jones Sustainability Index and the Ethibel Sustainability Index.
Kraft operates in Romania since 1994 after it acquired Brasov-based Poiana Confectionery factory, renamed afterwards Jacobs Suschard Romania S.A. In 2000, Kraft Jacobs Suschard changes name into Kraft Foods Romania.
Romanian chocolate market is estimated at €200 million. The chocolate consumption is around 2kg per capita. The biggest players in the market are Kraft Foods, Cadbury and Supreme Chocolat.
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