PLANNING AND ORGANIZATION
Global Perspective
THE BRITISH SELL ANOTHER TREASURE
The mating dance has been unusually long, but then again, the deal was unusually large. Kraft fi rst proposed to purchase the British institution Cadbury for a price of almost $17 billion in early September. Then it had until November 9 to make a formal offer or give up the fi ght. The courtship unleashed a barrage of bad puns (e.g., “Cadbury gags on Kraft bid”). It also stirred up atavistic fears across Britain of a faceless American conglomerate wrecking a great British institution and forcing Britons to give up Dairy Milk chocolate and Creme Eggs in favor of Cheez Whiz and Jell O.
A succession of studies has shown that three-quarters of mergers and acquisitions fail to produce any benefi ts for shareholders, and more than half actually destroy shareholder value (e.g., Quaker and Snapple, Daimler-Benz and Chrysler, Time Warner and AOL). The danger is particularly pronounced in hostile bids that cross borders and involve much loved brands.
Kraft Cadbury deal sounds designed for failure. Todd Stitzer, Cadbury’s boss, argues that his fi rm is an embodiment of a distinctive style of “principled capitalism” that was inspired by its Quaker founders nearly two centuries ago and has been woven into its fabric ever since. Destroy that tradition and “you risk destroying what makes Cadbury a great company.”
