Kraft's acquisition of Cadbury: Was it an amicable transatlantic merger or a hostile takeover?

• Published date: 01 March 2019
• Author: Syed Tariq Anwar
• Date: 01 March 2019
• DOI: http://doi.org/10.1002/tie.21995

INTERNATIONAL BUSINESS CASE STUDIES

CASE STUDY

Kraft's acquisition of Cadbury: Was it an amicable transatlantic

merger or a hostile takeover?

Syed Tariq Anwar

Department of Management, Marketing and

General Business, Paul and Virginia Engler

College of Business, West Texas A&M

University, Canyon, Texas

Correspondence

Syed Tariq Anwar, Department of

Management, Marketing and General

Business, Paul and Virginia Engler College of

Business, West Texas A&M University,

Canyon, TX 79016.

Email: sanwar@wtamu.edu

This case-based research evaluates and discusses Kraft's 2009–2010 acquisition of the UK-

based Cadbury, which turned into a bitter fight and a hostile takeover. As both firms have a rich

history and distinct brand identities, the merger came to the attention of the global media and

public on both sides of the Atlantic. Drawing on the merger's lengthy negotiations and the two

companies' distinctive corporate cultures, this article analyzes the merger and its chaotic negoti-

ations and developments. The merger was opposed in the United Kingdom because of Kraft's

harsh approach of targeting an iconic British brand that had been in business for over 150 years.

Eventually, both companies did compromise in an amicable manner and concluded a friendly tie-

up. The postmerger period reveals that Kraft's acquisition was a part of its future reorganization

and expansion in global markets. This case-based research also provides academic and practical

implications for international business managers as well as multinational corporations.

KEYWORDS

acquisitions, Cadbury, global, Kraft, mergers, takeovers, transatlantic

1|KRAFT'S ACQUISITION OF CADBURY

AND AN UNINVITED BID

The purpose of this case-based research is to analyze and discuss the

“global”merger of Kraft Foods Inc. (hereafter Kraft) and Cadbury PLC

(hereafter Cadbury). We achieve this purpose by investigating the

issues of the merger and its primary, secondary, and tertiary actors in

the negotiation process. We also include the media coverage and

postmerger developments that took place in a hostile as well as amica-

ble environment. Two Latin phrases accurately describe the Kraft–

Cadbury merger on both sides of the isle: mutua pactum (mutual

agreement) and invocatus confundo (uninvited merger). As the merger

became a major media story, it was widely discussed and debated in

academic and practitioner circles. In addition, today's mergers and

acquisitions (M&As) can become complex because of national cul-

tures, regulatory hurdles, nationalism, and local laws.

In the Kraft–Cadbury merger, we specifically used case-based

research and industry-specific data, which are particularly useful for

understanding firm-specific history, evolutionary growth, and corpo-

rate events and incidents (see Danneels, 2011; Weiss, 1990, 1993,

2006; Welch, Piekkari, Plakoyiannaki, & Paavilainen-Mäntymäki,

2011; Zundel, Holt, & Popp, 2016). Case-based research can also add

a meaningful contribution to the literature by seeking “critical realism”

and its related domains (Easton, 2010, p. 118). Cross-border M&As

and their corporate agreements and rules can be inherently complex

because of the issues of national laws, antitrust policies, legislative

agendas, and cultural issues (see Anderson & Manns, 2017; Armour,

Jacobs, & Milhaupt, 2011; Armour & Skeel, 2007; Atanassov, 2013;

Cain, McKeon, & Solomon, 2017; Hunt, 2007; Jones & Davies, 2014).

In addition, “institutional specificities”(Riad, Vaara, & Zhang, 2012,

p. 121) and “protectionist positions”(Motta & Ruta, 2012, p. 115) can

add more complexities to corporate tie-ups and other combinations.

These and other issues can become even more complex because

of the countries' economic nationalism, national cultures, protectionism

(see D'Costa, 2009), and regulatory policies (Cain et al., 2017; Catan &

Kahan, 2016;Cho, 2017; Rowoldt & Starke,2016; Schnitzer, 1996; Ser-

etakis, 2013). Also important are the issues of “sociocultural integration”

(Rottig, 2013,p. 439) and corporate strategies(Patrone, 2010, 2011).

2|ISSUES OF CROSS-BORDER M&AS

Table 1 provides a detailed list of cross-border M&As and corporate

tie-ups that were opposed by national governments, industries,

DOI: 10.1002/tie.21995

Thunderbird Int. Bus. Rev. 2019;61:439–451. wileyonlinelibrary.com/journal/tie © 2018 Wiley Periodicals, Inc. 439