Kraft, the world’s second-largest foodmaker, said yesterday it will pursue the takeover to create a company with $50 billion in annual revenue. Since Rosenfeld took command of Northfield, Illinois-based Kraft in June 2006, the company completed the purchase of the Iberian units of United Biscuits Group and paid $7.8 billion for Paris-based Groupe Danone SA’s biscuit unit.
“She’s doing the right thing,” Donald Yacktman, an investor who holds Kraft shares, said yesterday in a telephone interview. Yacktman, founder of Yacktman Asset Management Co. in Austin, Texas, said Rosenfeld may sell off certain parts of Cadbury and expand others if a deal were to be reached.
Rosenfeld, 56, took the bid for Cadbury directly to shareholders yesterday after the U.K. maker of Trident Gum and Dairy Milk chocolate rejected Kraft’s offer as inadequate. The purchase would give her access to emerging markets such as India and complementary products for Kraft’s lines of biscuits, powdered drinks, chocolate and dairy foods.
“This proposed combination is about growth,” Rosenfeld said in a statement yesterday. According to a letter from Rosenfeld to Cadbury Chairman Roger Carr that was released by Kraft, the two met Aug. 28 to discuss the takeover proposal.
The meeting took place in London, according to two people familiar with the matter. Kraft has been interested in Cadbury since before Kraft was spun off from Altria Group Inc. in 2007, the people said.
PepsiCo Ties
Rosenfeld was named CEO in June 2006 and has spent about 25 years at Kraft, with a three-year interruption to run PespiCo Inc.’s Frito-Lay snack-food unit. Last month, Forbes magazine ranked her No. 6 on its list of the world’s most powerful women, three behind PepsiCo CEO Indra Nooyi.
Nooyi last month reached an agreement to retake control of her company’s two biggest bottlers after an initial rebuff.
Cadbury jumped 215 pence to 783 pence yesterday in London, exceeding the 745 pence a share Kraft offered. Cadbury said July 29 that revenue will rise about 4 percent this year and profit margins will widen as it cuts expenses and raises prices.
Kraft, which traded at about $31 when Rosenfeld was named CEO, rose 11 cents to $28.10 Sept. 4 on the New York Stock Exchange. Revenue has declined the past two quarters.
‘Limited Scale’
“Cadbury’s prospects, ability to fully realize operational efficiencies and capacity to invest are necessarily constrained given its limited scale and scope relative to larger global competitors,” Rosenfeld said in her letter to Carr.
During her earlier stint at Kraft, Rosenfeld pushed to expand into ready-to-drink beverages by buying Capri Sun. The division containing that business “grew at a double-digit rate” in the second quarter, the company said in August.
More recently, Rosenfeld sold Post Cereals, the maker of Shredded Wheat and Grape-Nuts, in 2008 for about $2.6 billion. The sale has still left Kraft dependent on revenue from North America with more than 60 percent of sales coming from the region last quarter.
“Kraft is a bit landlocked,” said Thomas Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania. He has about $150 million of Cadbury stock. “They know they have to get away from the U.S. to grow.”
Russo said that while Rosenfeld has placed renewed importance on the consumer at Kraft, he sold his shares in 2008 because of the lack of international presence.
By contrast, about 40 percent of Cadbury’s revenue comes from developing markets and represents almost 70 percent of the company’s growth, Russo estimates. Cadbury’s emerging-market brands include Bournvita, a cocoa-based drink, and Perk chocolate wafers, both sold in India.
At Frito-Lay, Rosenfeld boosted sales of Tostitos and Doritos chips through increased advertising. She returned to Kraft as the company was trying to respond to surging commodity costs and prevent customers from switching to less-expensive private-label brands of cheese and coffee. She is thoughtful about relations with the U.S. consumer, Russo said.
“Her insights are very good because they focus on the consumer and the customer,” Russo said.
“She’s doing the right thing,” Donald Yacktman, an investor who holds Kraft shares, said yesterday in a telephone interview. Yacktman, founder of Yacktman Asset Management Co. in Austin, Texas, said Rosenfeld may sell off certain parts of Cadbury and expand others if a deal were to be reached.
Rosenfeld, 56, took the bid for Cadbury directly to shareholders yesterday after the U.K. maker of Trident Gum and Dairy Milk chocolate rejected Kraft’s offer as inadequate. The purchase would give her access to emerging markets such as India and complementary products for Kraft’s lines of biscuits, powdered drinks, chocolate and dairy foods.
“This proposed combination is about growth,” Rosenfeld said in a statement yesterday. According to a letter from Rosenfeld to Cadbury Chairman Roger Carr that was released by Kraft, the two met Aug. 28 to discuss the takeover proposal.
The meeting took place in London, according to two people familiar with the matter. Kraft has been interested in Cadbury since before Kraft was spun off from Altria Group Inc. in 2007, the people said.
PepsiCo Ties
Rosenfeld was named CEO in June 2006 and has spent about 25 years at Kraft, with a three-year interruption to run PespiCo Inc.’s Frito-Lay snack-food unit. Last month, Forbes magazine ranked her No. 6 on its list of the world’s most powerful women, three behind PepsiCo CEO Indra Nooyi.
Nooyi last month reached an agreement to retake control of her company’s two biggest bottlers after an initial rebuff.
Cadbury jumped 215 pence to 783 pence yesterday in London, exceeding the 745 pence a share Kraft offered. Cadbury said July 29 that revenue will rise about 4 percent this year and profit margins will widen as it cuts expenses and raises prices.
Kraft, which traded at about $31 when Rosenfeld was named CEO, rose 11 cents to $28.10 Sept. 4 on the New York Stock Exchange. Revenue has declined the past two quarters.
‘Limited Scale’
“Cadbury’s prospects, ability to fully realize operational efficiencies and capacity to invest are necessarily constrained given its limited scale and scope relative to larger global competitors,” Rosenfeld said in her letter to Carr.
During her earlier stint at Kraft, Rosenfeld pushed to expand into ready-to-drink beverages by buying Capri Sun. The division containing that business “grew at a double-digit rate” in the second quarter, the company said in August.
More recently, Rosenfeld sold Post Cereals, the maker of Shredded Wheat and Grape-Nuts, in 2008 for about $2.6 billion. The sale has still left Kraft dependent on revenue from North America with more than 60 percent of sales coming from the region last quarter.
“Kraft is a bit landlocked,” said Thomas Russo, a partner at Gardner Russo & Gardner in Lancaster, Pennsylvania. He has about $150 million of Cadbury stock. “They know they have to get away from the U.S. to grow.”
Russo said that while Rosenfeld has placed renewed importance on the consumer at Kraft, he sold his shares in 2008 because of the lack of international presence.
By contrast, about 40 percent of Cadbury’s revenue comes from developing markets and represents almost 70 percent of the company’s growth, Russo estimates. Cadbury’s emerging-market brands include Bournvita, a cocoa-based drink, and Perk chocolate wafers, both sold in India.
At Frito-Lay, Rosenfeld boosted sales of Tostitos and Doritos chips through increased advertising. She returned to Kraft as the company was trying to respond to surging commodity costs and prevent customers from switching to less-expensive private-label brands of cheese and coffee. She is thoughtful about relations with the U.S. consumer, Russo said.
“Her insights are very good because they focus on the consumer and the customer,” Russo said.
0 comments:
Post a Comment