Cadbury, which owns brands including Dairy Milk, Creme Egg and Trident gum, rejected Kraft’s £10.2bn offer for the company earlier this week, claiming it “fundamentally undervalued” the company.
But the move is now expected to trigger other multinationals, such as Nestlé, Mars and Hershey’s, to launch their own bids for Cadbury.
“A deal will happen, but it won’t necessarily be with Kraft. I don’t think the end game will necessarily be a straight takeover. [Cadbury] has a pretty disparate collection of fantastic local brands, many of which have natural homes elsewhere. I think we’ll see spin-offs,” the insider says.
Nestlé and Hershey’s could team up, for example, with the former taking on Cadbury’s gum business, and Hershey’s its chocolate brands to get around anti-trust issues.
But while Kraft’s initial offer has fallen well short of expectations, some observers say a higher offer should not necessarily be ignored.
Value Engineers director Anna Eggleton says that while Cadbury, with its Quaker roots, has a strong UK heritage it has become less relevant in the modern day.
The Cadbury insider adds that none of the company’s brands are “global powerhouse brands”. “You can’t call them global unless they really impact the US market.”
But it will not have escaped Kraft’s attention that last year more than a third of Cadbury’s revenues came from emerging markets, with India and Mexico among them. And its potential for further growth can not be underestimated.