Financial Information Performance of Cadbury Plc and Kraft Food Inc Trough 2008

MSc Financial and Risk Management

ACCOUNTING AND FINANCE

FINANCIAL INFORMATION PERFORMANCE OF CADBURY PLC AND KRAFT FOOD INC TROUGH 2008

Prepared for:

David Marshall

Prepared by:

Johanna Renteria A. ID. 4255084

Francy Miley. ID. 4304030

November 30th 2009

BUSINESS SCHOOL

BOURNEMOUTH UNIVERSITY

Table of Contents

Introduction 1

A. Overview of the two companies: 2

B. SWOT Analysis 3

C. Evaluation of the Management performance 7

D. Information relating to the Stakeholder according to the financial statements 8

Conclusion 9

FINANCIAL INFORMATION PERFORMANCE OF CADBURY PLC AND KRAFT FOOD INC TROUGH 2008

Introduction

On 28th August 2009 “the food giant” Kraft Foods Inc made a proposal to the Board of Cadbury plc to combine the two companies, for £10.2bn (A Wilson,Telegraph.co.uk, 2009), however on 31st August this proposal was rejected in a letter to the Chairman and CEO of Kraft. On 7th September Kraft published the conditions of the proposal and the Board of Cadbury confirmed their rejection on the basis that it does not make strategic or financial sense, the reason for this was Kraft’s proposal undervalued the Group and its prospects. On 30th September the Takeover Panel Executive under Rule 2.5 of the UK Takeover Code declared that it has imposed a deadline of 5pm on 9th November 2009, in order that Kraft announces a firm intention to make an offer for Cadbury or not (Cadbury website, 2009). On 9th November Cadbury again rejected the offer of £9.8bn (A Wilson, Telegraph.co.uk, 2009).

Since Kraft’s proposal Cadburys Shares have fluctuated with an increase to almost 40% on 8th September 2009 (E Newmark, The Wall Street Journal, 2009) to a lower price during the last two weeks of October closing at 770p, because of the market atmosphere there is fear that Kraft could be struggling to increase its offer (H Power, Times Online, 2009). Around this negotiation, it is obviously in the interest of Kraft to...