Why would Cadbury reject £10bn?

The world of confectionary was in uproar this morning after a surprise announcement by American cheese singles manufacturer Kraft, which said it had made a £10.2bn takeover bid for Birmingham-based confectionery firm Cadbury.

But the board of Cadbury, which lost the ‘Schweppes’ from its name last year after its split from Dr Pepper manufacturer American Beverages, said it was rejecting the proposal – even though it saw share prices rocket almost 40% after Kraft made the announcement.

Why would Cadbury reject the offer of a takeover by a company which owns brands such as Oreo and Toblerone? Not only would Kraft offer billions of pounds – it would also help Cadbury to break into markets abroad, creating what the American company dubbed a ‘global powerhouse’ in snacks.

The board of Cadbury itself has been very quiet on the matter, so we can only speculate. Perhaps it has something to do with what Kraft chairman Irene Rosenfeld called Cadbury’s ‘proud heritage’. “Cadbury has built wonderful brands by focusing on quality, innovation and marketing... [and] we are eager to built upon [its] iconic brands and strong British heritage,” she told the London Stock Exchange.

The ‘proud heritage’ she speaks of is never more apparent than at its Cadburyland visitor attraction, where the themes of the company’s Birmingham beginnings and the history of confectionary production are frequently intertwined. To them, Birmingham equals chocolate. Perhaps the company feels, so soon after its demerger from another US company, Kraft could threaten Cadbury’s home-grown charm?

Whatever the reasons, Smarta will be watching this story with interest. The brand has a fiercely loyal following from UK consumers: if Kraft wants to take that over, it’s going to have to tread carefully.

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