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 twocompanies: 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 combinethe 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 theGroup 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’sproposal 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 ofKraft to complete this deal, with the expectation that a take-over of Cadbury would increase its growth and margin profile. This assessment aims to evaluate the relative strengths of the two companies, the performance of the two management teams, as well as the benefit that the stakeholders may gain from the two annual reports at 31st December 2008 and assess future prospects for the two companies.Before beginning with the evaluation (using a SWOT analysis) of the two companies and with the aim to analyse the performance of the firms, it is important to give the definition of SWOT (strengths, weaknesses, opportunities and threats). A SWOT analysis is a way to consider the best opportunities and strengths for a company. It is a method to identify the weaknesses to be fixed, and the threatsthat the company face. (Available from: http://www.clintburdett.com /process/08_synthesis _03_SWOT_def.htm).
This assessment is divided into four sections. Firstly it will present an overview of the two companies showing main facts and figures. Secondly it will look at the Swot analysis of the two companies through the financial information provided in the 2008 report. The third section willevaluate the management performance; finally the assessment will mention the most relevant information shown in the annual reports which is vital for the stakeholders to make decisions.

A. Overview of the two companies:

Cadbury plc Overview
Cadbury is a Global company focused in three main categories, these are: chocolates, gums and candy. Cadbury started in 1824 in Birmingham Englandselling cocoa and chocolate, since then, the company has expanded around the world and after the selling of the American Beverages business in may 2008, the firm has focused in confectionary and became “Cadbury plc”, its vision, to be the world’s biggest and best confectionary company.

Cadbury Main figures and Facts
 The firm operates in over 60 countries
 The firm was created by John...