BRUSSELS -The European Commission has now cleared the way for the take-over of Cadbury by the U.S company Kraft Foods Inc by the way of public offer after the commission concluded that the deal would not impede competition anywhere in Europe.
The deal is conditional upon the divestment of the Polish and Romanian chocolate confectionery businesses of Cadbury. This would create the world’s largest take over since Mars-Wrigley.
Kraft Foods is active in more than 150 countries in the area of food and beverages, while Cadbury is the producer and seller of chocolate and sugar confectionery.
Kraft Foods has a strong presence in most of the European Union with the exception of the United Kingdom and Ireland where customers’ preferences remain strong for traditional British chocolate, where Cadbury is the market leader
In continental Europe Cadbury is mainly active in France, Poland, Romania and Portugal and this through local brands that were previously acquired by Cadbury.
Kraft's brand penetration into the United Kingdom and Ireland is low and does not compete with Cadbury, which led the European Commission to the conclusion that there are no real competition concerns.
But, the Competition Commissioner, Neelie Kroes, identified competition concerns within the chocolate confectionery business in Poland and Romania, where the combined market share of Cadbury and Kraft is especially high as their brands are competing. In particular within the chocolate tablets market.
Therefore, Kraft Foods committed to divest Cadbury's Polish confectionery business marketed under Wedel brand and Cadbury's domestic chocolate confectionary business in Romania.
Under British takeover rules, Kraft Foods has until January 19 to raise its bid and the Cadbury shareholders have until February 2nd to make their choice. According to Kraft's, it had received 1.52% take-up from Cadbury shareholders for its bid. It is expected, that most Cadbury shareholders will wait to see if Kraft will raise its cash offer before making their final decision.
Nestle decided on Tuesday not to make a rival bid for Cadbury. Other potential bidders are Hershey as well as Ferrero from Italy, who have until January 23rd to come up with fully financial bids or withdraw.
Kraft's purchase of Cadbury will make it possible for the American Food group to expand into, amongst others, the fast-growing Indian market.