Cadbury

While Kraft’s 19.6 billion dollar acquisition of British confectionary giant Cadbury in January has led to a profitable second quarter for the American-based CPG corporation, local pride and fierce loyalty to the former chocolate maker has illustrated several transaction issues Kraft will need to overcome to successfully assimilate the brand’s products, plants, capital, talent, and trust into its global portfolio. Kraft has been shuttering unprofitable plants throughout England, including the 75-year-old Keynsham facility it had promised to keep running before the deal was made. The short-term investor directed acquisition, viewed as a travesty by Britain’s business and political community, has led Parliament to create an independent Takeover Panel to recommend reforms concerning how British companies can conduct mergers and takeovers. The panel is deliberating ways to empower longer-term shareholders to protect their stakes in a company against opportunistic short-term investors, either by raising the threshold for acquisition or by preventing those who buy shares of a company after an acquisition offer has been made to vote on the measure.

This article brings to light various challenges Kraft must face brought about by the creation of a formal symbiotic interdependency (the acquisition) with Cadbury. The most formal of symbiotic interdependencies, Kraft’s takeover of Cadbury will allow the company to better manage powerful suppliers and customers in the British and worldwide markets. Corporations tend to participate in mergers and acquisitions only when the environment requires players to take control of a crucial resource or interdependency. This move will likely force Kraft to incur large planned and unforeseen expenses to render control of Cadbury’s market, players, employees, and stakeholders.

According to the text, organizations should choose an inter-organizational strategy that best reduces uncertainty while minimizing the cost of control. Kraft...