Question

In negotiation, Kraft and Cadbury discussed how to divide expected gains from cost and revenue synergies. Which shareholders were in a better bargaining position to claim higher gains? What bargaining power did the shareholders have? Give at least 3 points of arguments

Answer 1

Kraft was the gainer in the specified acquisition because of gaining through the value in its overall shares when it was merged with Cadbury.

It was due to following reasons-

A. It created a company with market value and sales of approximately 50 billion dollars.

B.it also provided with the diversification opportunity for kraft because it was exposed to various other aspect of food and beverages business through merger with Cadbury.

C. Deal will be approximately leading into savings of the cost of craft to an approximately 675 millions dollars.

So due to these factors, it would have created value for both the the company shareholders but it was more beneficiary for kraft for the longer perspective