The Banking and Strategy Initiative

Chillin' out till it needs to be funded

What’s the deal with Cadbury?

It get’s wierd(er). I am flummoxed. Let me bite into a little late night chocolate. Searing hot.

One would have thought, esp the fat cat bankers and the Bens, that Cadbury’s needed a richer valuation. As the story unfolds however, there seems to be more than what meets the eye.[picapp align=”right” wrap=”false” link=”term=FUDGE&iid=5140001″ src=”d/4/9/6/closeup_of_a_3b19.jpg?adImageId=9179782&imageId=5140001″ width=”120″ height=”120″ /]

Nestle backing Kraft did not bring extra cash from Kraft and with Buffet watching, nothing more is likely to happen. However the counter offer for 790p or $12.80 as mentioned by Hershey’s today shows a rather bankrupt chocolate bank. I thought only one would be Charlie’s Willy Wonka. All the players are strapped for Cash, the market is growing, the health foods market is not hurting the Chocolate segment, i don’t see where it needs Willie wonka to save Charlie Cadbury.

But Cadbury is obviously out-of-pocket and cannot fund itself through a Management buy out, neither are the numbers interesting enough for PE. It seems like PE funds are passing on this one maybe because they do not read their stuff here. More chocolate dinners for them please. Transformers? Anyone? with a nice movie to curl up with , of course..[picapp align=”left” wrap=”true” link=”term=Chocolate+production&iid=5255854″ src=”3/c/f/1/Close_up_of_6a46.jpg?adImageId=9179945&imageId=5255854″ width=”120″ height=”120″ /]

I think the like of Bronson Point are obviously busy with bigger prey, but there are others who can help Philip Cadbury out of this predicament and continue growing the market. They were a very happy lot after announcing results in the local India office, esp as India and China continue to recruit in MNCs so we can be happy when things don’t move and we can get on with selling. I’m still waiting for the next offer myself.. I need that job for growing India’s brilliant consumer economy.[picapp align=”center” wrap=”true” link=”term=Cadbury%27s&iid=7312398″ src=”3/f/0/6/Cricket_Field_at_0be5.jpg?adImageId=9179974&imageId=7312398″ width=”120″ height=”116″ /]

But, as of now, Ben applied first and Warren Buffet does like fudge. coming back to PE front, no, emerging market desks here are unlikely to be interested because there is so much in infrastructure and IT, so much in existing brands that need to grow 2-3X from a large established base at ITC, Unilever and P&G apart from Pepsi and Coke. And Britannia, Fonterra, Kraft itself with the unhurt Nestle and the OTC pharma specials from the big 4.

And the issue was..cash. Of course, they might even need more cash to counter the Diamond Foods campaign in the Superbowl, and Irene wouldn’t overspend. Hershey’s is too small to play with Cadbury, but it shows how much Kraft is under-spending when cottage industry players like Hershey’s that have a niche like Swiss Cheese, no go on this deal.

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This entry was posted on January 18, 2010 by in Financial Markets, O'nomics, Retail Lifestyle and tagged , , , , , , , , , .

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