• Bloomberg, Ad Age, USA Today, Wednesday, January 20, 2010 10:37 AM

When all was said and done -- after all the Sturm und Drang of hallowed British brands being tainted by crass American fake-cheese marketers -- all it took is what it usually does: the right amount of cash and stock. All told, more than $19 billion worth. The Kraft acquisition of Cadbury seals the legacy of dealmaker Bruce Wasserstein, who advised Kraft CEO Irene Rosenfeld as CEO of Lazard before he passed away a month after the initial bid in September, Brett Foley, Jacqueline Simmons and Zachary R. Mider report in Bloomberg.

The combined company will have about $50 billion in annual sales, with Cadbury adding Trident gum and Creme Eggs to Kraft's Velveeta processed cheese, Oreo cookies, Toblerone chocolate and Tang drinks and will command about 15% of the world's confectionery market. It will still trail Mars in the candy segment, however.

"Together we will be a global leader in the confectionery category and we'll have leading market shares in many countries," Rosenfeld told investors in a conference call followed by Ad Age's Emily Bryson York. "This is important because we believe scale will be an increasing source of competitive advantage in both the confectionery category and the food industry as a whole."

Kraft's focus will be on "growth categories," Rosenfeld says, and it is looking to expand its international footprint by making use of Cadbury's international distribution channels to penetrate growing markets such as Brazil, India, Russia and China. "Kraft Foods is strong in modern retail channels, that is, traditional grocery stores," Rosenfeld points out. "At the same time, Cadbury is very strong in instant-consumption channels."

In a roundup of reactions to the deal, USA Today's David Lieberman and Matt Krantz find a chorus of skeptics, but also those who applaud the deal, as well as the requisite "let's-wait-and-see" types. "My worry is they ruin [Cadbury]," says D.A. Davidson analyst Timothy Ramey, who cut his rating on Kraft to "hold" from "buy." But Standard & Poor's analyst Tom Graves doesn't see the price as too onerous, as Warren Buffett warned it might be earlier, but says that it now has to put execution where it mouth has been.

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