Kraft Cadbury Takeover

AGENDA

Kraft + Cadbury ( A Strategic Fit). Recommended Offer: Structure & Economics. Conclusion.

9/23/2010

1

KRAFT FOODS OVERVIEW NYSE: KFT Ranking :World s second largest food company after nestle . Brands available in 150 countries. Headquarter: Chicago, Illinois. Employees Approximately 100,000 2008 Revenues $42 Billion. The firm has two main operating units-Kraft Foods North America and Kraft Foods International
9/23/2010 2

KEY BRANDS
Of its brands, more than 40 are at least 100 years old, nine brands have revenue exceeding $1 billion and more than 50 additional brands have revenues greater than $100 million. The company holds the top global position in 11 product categories: coffee, cookies, crackers, cream cheese, dessert mixes, dry packaged dinners, lunch combinations, powdered soft drinks, process cheese, salad dressings, and snack nuts.
9/23/2010 3

SHAREHOLDERS

9/23/2010

4

FINANCIALS

9/23/2010

5

KRAFT: Major Priorities (long term strategy)

9/23/2010

6

9/23/2010

7

CADBURY PLC OVERVIEW
Ranking: one of the world's largest confectionery companies with No. 1 or No. 2 positions in more than 20 of the world's 50 biggest confectionery markets. The largest and most broadly spread emerging markets business of any confectionery company. Employees: 48,000. 2008 Revenues:$9 Billion

9/23/2010

8

KEY BRANDS

‡ direct operations in more than 60 countries.

9/23/2010

9

HOW WE STACK UP
CADBURY SIZE BRANDS AND PRODUCTS 2nd largest confectionery co after mars -wrigley Dairy milk and roses chocolates, trident gum and halls cough drops. KRAFT World¶s 2nd largest food group, after nestle. Oscar mayer hot dogs, maxwell house instant coffee, milka, toblerone and tang. $42 billion 98000 1903 Northfeild , illinois Irene rosenfeld
10

REVENUE IN 2008 $8.8 billion EMPLOYEES FOUNDED IN HQ CEO
9/23/2010

46000 1824 Uxbridge , london Todd stitzer

STRATEGIC RATIONALE (KRAFT + CADBURY)

‡ Geographic break down by 2008 revenues

9/23/2010

11

TRANSACTION WOULD CREATE
‡ A company with approximately $50 billion in revenues. ‡ A global powerhouse in snacks, confectionery and quick meals;

‡ A geographically diversified combined business, ( including developing markets like India, Mexico, Brazil, China and Russia). ‡ A strong presence in instant consumption channels in both developed and developing markets. ‡ The potential for meaningful revenue synergies over time from investments in distribution, marketing and product 9/23/2010 12 development.

COMBINED COMPANY WILL PRESERVE CADBURY S PROUD HERITAGE AND TRADITION

m

9/23/2010

13

TRANSACTION DELIVERS VALUE FOR KRAFT SHAREHOLDERS

m

9/23/2010

14

9/23/2010

15

m

9/23/2010

16

m

9/23/2010

17

m

9/23/2010

18

m

9/23/2010

19

m

9/23/2010

20

m

9/23/2010

21

SYNERGIES AND COST SAVINGS
‡ Potential for meaningful revenue synergies
- Highly complimentary geographic footprint
- Enhanced distribution, marketing and product development

‡ Additional annual cost savings of $675 million
- Pre tax annual cost saving identified as 300 million in operational synergies 250 million in general and administrative synergy 125 million in marketing and selling synergy - Performance improvement programs at Kraft and Cadbury - One off implementation cost of $1.3 dollars

Our ability to successfully integrate
Nabisco (2000)
‡ We entered the rapidly growing snacks category ‡ Revenues increased by 30% ‡ Sales step up in Latin America and to a lesser extent in Asia Pacific ‡ Synergies exceeded expected results ‡ Acquisition of Spain and Portugal biscuit business, bringing European manufacturing base and return of Nabisco trademarks. ‡ Added $400 million in revenue and $170 million in operating profit ‡ Integration proceeded on track ‡ Expansion of global core category and bringing a third leg in European market and increased developing market presence ‡ Added $2.6 billion in revenue and $400 million in operating profits

United Biscuits (20006) Groupe Danone¶s Global Buiscuit Business (20006)

Long term targets and near term benefits
Transformational combination creates a top tier performer in the global food industry

Near term results ± expected increased EPS of 0.05 by 2011 + Mid teens IRR

Long term targets ± Organic revenue growth 5%, Long term EPS growth 9%-11%

SUMMARY

The final offer marked a 14% increase from our initial offer. Will create the worlds largest confectioner. Recommended offer represents an attractive offer for Cadbury share holders
- Combination of cash and upside as continuing share holders - Transforms the portfolio and enhances the long term growth prospects

Generates a strong near term economic return
- 5% increase in EPS in 2011 - 9%-11% increase in long term - Access to an iconic brand with a strong penetration in growth markets - Access to a strong marketing and distribution channel in developing market

RISK ANALYSIS

- Over exposed to large low growth developed market
A range of products and categories that have competition from various other private companies Unfocused Business model Continued weak economic environment Global chocolate consumption has fallen by 2% Integration of business Higher cocoa prices may pressure chocolate companies to make acquisitions Issuance of debt causing our rating to lower

Sign up to vote on this title
UsefulNot useful