Purchasing to help Cadbury rebuff Kraft’s advances

15 December 2009
15 December 2009 | Jake Kanter

Cadbury is to look towards procurement for savings in its attempt to fight Kraft’s takeover bid.

In a defence document for shareholders, the UK confectionery company said it would reduce costs by using its global buying power to secure better terms from vendors, as well as standardising products and packaging.

It added that sustainable sourcing initiatives, such as Fairtrade conditions for Cadbury Dairy Milk suppliers, will help give the company a competitive advantage.

Cadbury chairman Roger Carr said in a statement: “We believe our shareholders should have the opportunity to reap the full rewards of the investment that has already been made in creating a platform for future improved revenue growth, enhanced profitability and high cash returns.”

Kraft’s original takeover bid said purchasing would contribute to total savings of $625 million (£384.3 million) as part of the proposed merger. But Cadbury has blasted Kraft’s advances as “derisory”, arguing the US food firm “fundamentally undervalues the group and its prospects”.

In a statement to the London Stock Exchange today, Kraft said Cadbury’s growth targets are “subject to significant risk and uncertainty”. It questioned the firm’s failure to detail input costs for next year, when raw material costs, such as cocoa are set to remain high.
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