In the conference call, Kraft CEO Irene Rosenfeld had with Wall Street analysts, she mentiones several major synergy points of this tie-up.
These will be the preliminery outcomes of this acquisition, aside from financial and/or tax benefits, feel free to comment on them or add more if you like:
- Cadbury has more "instant consumption" channels like gas stations, cornershops which are well penetrated by Cadbury products in many countries ( also in Turkey where I live) wheras Kraft is more concentrated on supermarkets and groceries where margins are lower, so when they are together, overall distribution will be higher for both and the margins will increase,
- Cadbury has big business in some emerging markets like India, South Africa, Mexico and Turkey where Kraft is relatively weak or not existing; similarly Kraft also has strong emerging markets like Brasil and China which will help to Cadbury products,
- There are complementary products, when two companies bring together their portfolio, in many markets they can enjoy benefits of a larger and well balanced products,
- The tie-up will generate the number one global confectionery player with 14,8% share slightly above of Mars who has 14,6%...obviously scale matters.
Certainly, those synergies are all on paper now, if and when they can be activated time will show...
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