Kraft identifies huge procurement savings from Cadbury merger

7 September 2009

08 September 2009

Kraft Foods' proposed acquisition of Cadbury could lead to total savings of at least $625 million (£378 million) a year.

In a statement yesterday, Kraft said a £10.2 billion takeover of the UK confectionary giant could result in procurement, manufacturing and logistics cost reductions of up to $300 million a year.

Kraft, the biggest food company in the US, whose brands include Milka and Toblerone, said the savings could be achieved through greater spending power.

The rest of the savings would be achieved through general and administrative reductions ($200 million) and marketing and selling cuts ($125 million).

Irene Rosenfeld, chairman and CEO of Kraft, said: "Our extensive combined global business network would create opportunities for talented Cadbury employees and managers across all areas of the combined enterprise."

Cadbury rejected the merger yesterday, arguing it "fundamentally undervalues the group and its prospects". The company's shares rocketed by 215p to 783p on news of the potential merger.

SMsep2009

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