I am a chocolate fiend. However, I am not the type of chocolate fiend that follows the happenings of my favorite chocolate companies. So when I logged onto MSN today, one particular headline caught my eye rather quickly. Who knew that Hershey is trying to buy Cadbury? I sure didn’t, so I had to look into it!
On the Hershey website, it is stated that Hershey holds a license to manufacture British-based Cadbury products in the United States. They have actually held this license since 1988, and have introduced three new products to the Cadbury line since that time. Note that the license is only for the US; Cadbury Global manufactures the Cadbury products for the rest of the chocolate-loving world.
On CNN Money, Kraft Foods is listed as the front runner for acquisition of the Cadbury company. However, there is an Italian company called Ferrero, and everyone’s favorite Hershey company that are also listed as top contenders, although neither one has said publicly that they are in the ring.
A little bit of background about Ferrero (since we all know what Hershey is): They are a family owned company that has been around for 60 years, and has never initiated a takeover of any company. The owner, Michele Ferrero, is the richest man in Italy. They are the makers of the Rocher chocolates (think delicious and not so very nutritious).
The UK Takeover Panel asked both companies to solidify their intentions after the Cadbury stock reached its highest point ever in the last month! Who knew that rumors of a takeover made stocks soar?! Apparently the people are expecting great things to happen after a new company takes over Cadbury.
What they probably don’t know is that even though Hershey would seem like the logical choice (they’ve already been manufacturing Cadbury products for over 20 years), Kraft is the more stable choice. According to Reuters, Hershey is in a world of financial hurt. In order to take over the Cadbury company, they would significantly add to their already significant debt load. Their bid is rumored to be nearly $17 billion!!
Even though it would add to their debt load, I personally hope that Hershey is able to come out on top on this one. Having a chocolate legend like Cadbury (think crème eggs) owned by Kraft (think macaroni and cheese) just doesn’t seem appropriate, does it?
What I couldn’t find on the internet is what happens to the license that Hershey currently holds to manufacture Cadbury products if they get outbid. Does it continue, even though Cadbury is held by a different parent company? Or does the contract become null and void after Cadbury is no longer the company in charge? If you are a better search engine user than I, and can find the answer to this question, let me know!
When reading this, I was definitely surprised to see that Kraft(R) was most likely buyer of this chocolate company. Like you said, when I think about Kraft(R), I think about cheese. I suppose it does give them another aspect of the industry world that they can gain profit from. Many may think that they would not know how to run the chocolate companies, but then again they will probably keep up most of the staff that is already currently there.
ReplyDeleteYears ago I worked for Hershey Resort – even though I worked for the resort we were still considered a part of the Hershey family so all of my wait staff and cooks could be apart of the chocolate workers union. My staff had more benefits and privileges than I did – they could call off from work for days with no repercussions.
ReplyDeleteSo it does not surprise me that Hershey is not in the lead to purchase this company. The last thing they need is another arena of union lead workers making demands / entitlements which drive up the cost of labor that ultimately raise the price of products for sale to consumers.
I'm personally rooting for Hershey as well. I've always liked their chocolate. I also have been to Hershey, Pennsylvania, to their factory.
ReplyDeleteLike Jane, I also associate Kraft with macaroni and cheese. That's weird that they want to buy out Cadbury. Hershey knows their chocolate, and will do a good job with Cadbury.
It was interesting to learn about Kraft(R) being a big part in this chocolate story, like said earlier, I think of cheese when I think of them. I wish Hershey and Cadbury would just stay seperate to be honest. I love Hershey chocolate and I love Cadbury eggs at Easter time!
ReplyDeleteI have to admit that I had no idea this was going on. I agree that it doesn’t seem right that Kraft would be in the mix to buy a chocolate company, but if you look at their website, there are multiple items they sell that include everything from coffee to cream cheese to bologna. I guess adding chocolate and other confections to the list wouldn’t be that big of a stretch. Even though it is already an international company, it would be nice to see it come to America instead of staying in Europe.
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