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Kraft Foods' acquisition of Cadbury will help it to expand its presence in developing markets, including India, by leveraging the infrastructure the British candy-maker has set up in these territories
Kraft Foods on Wednesday said its proposed $19.60-billion acquisition of Cadbury will help the company expand its presence in the developing markets, including India, by leveraging the infrastructure the British candy-maker has set up in these markets, reports PTI.
“One of the single biggest opportunities the company gets from buying Cadbury is that it enables us to fill out geographical white spaces and put our portfolio of products through Cadbury's infrastructure in markets like India,” Kraft’s chief executive Irene Rosenfeld said.
Yesterday, the Illinois-based company had sealed a deal to buy Cadbury for about $19.60 billion (£11.9 billion), ending months of bitter wrangling over the price.
"Together, we will have over 40 brands with revenues of over $100 million," Ms Rosenfeld said, adding the buyout would help Kraft to expand its footprint in developing markets, capitalise on population growth trends and provide scale to invest in infrastructure in key geographies.
The percentage of Kraft's net revenue from developing markets will also increase from 20% to 25% when combined with Cadbury, she said. "From Kraft Foods' perspective, Cadbury gives us meaningful entry into India," she added.
The deal would enhance Kraft's long-term revenue growth from 4% to over 5%. The company, which makes Oreo cookies and Velveeta cheese, expects the deal to close in mid-February.
Through the deal, which would create the world's biggest confectioner, both the companies seek to have leading positions in Brazil, Russia, India, China and Mexico.
"Kraft Foods and Cadbury have highly complementary geographic footprints," Ms Rosenfeld said.
Importantly, a combination would increase scale for both companies in markets where the two do not have significant presence, she said.
The combined group would also benefit from an improved position across Europe, including France and Spain.
The company said its strategy going forward would be to focus on becoming a leading snacks, confectionary and quick snacks company and to exit from the lower growth and lower margin businesses.