Blog: Dean BestRosenfeld to lead Cadbury into (another) new era

Dean Best | 5 December 2011

Kraft Foods today (5 December) named the CEOs of the two companies that its plan to split in two will create by the end of next year. And chairman and CEO Irene Rosenfeld, a controversial figure during and after the company's takeover of Cadbury, will remain in charge of the UK confectioner.

Rosenfeld has often grabbed the headlines for the wrong reasons in the almost two years since Kraft's acquisition of Cadbury.

A month after the deal, the US company's admission that it could not keep open a Cadbury plant it had, during its battle to buy the Dairy Milk Maker, it had indicated it could retain sparked anger. As did Rosenfeld's refusal to appear in front of a UK parliamentary committee on two occasions to answer questions about the takeover.

Rosenfeld also faced criticism over Kraft's decision to split in two and create two companies that would benefit from increased focus. Back in December 2009, she argued that Cadbury would benefit from Kraft's increased scale; the then Cadbury plc board dismissed Kraft as a "low-growth conglomerate" and said the UK firm would benefit from being a "pure-play confectioner". Just eighteen months on, Kraft conducted what looked like an about turn and decided that, after all, Cadbury would benefit from being part of a global snacks business.

Announcing Rosenfeld's appointment, Kraft lead director Mark Ketchum said: "Irene was the obvious choice to lead the global snacks company. As a result of her bold vision, courage to transform Kraft Foods' portfolio and investment in core brands and high-growth developing markets, we are now able to launch two formidable world-class companies."

Sanford Bernstein analyst Alexia Howard said it was "no surprise" Rosenfeld would lead the new global snacks business. Howard was more interested in the appointment of John Cahill, a partner at US private-equity firm Ripplewood Holdings, would become chairman of the second company, the new North American grocery firm.

The appointment of a private-equity executive could suggest that the new company could be sold after the split but Howard suggested that Cahill's experience in the separation of Pepsi Bottling Group from PepsiCo in 1999 would help Kraft.

Howard also argued Cahill could help the North American grocery firm grow in the years ahead via M&A.

"Given his private equity experience, Mr. Cahill may be able to guide the business on bolt-on acquisitions in 2013 and beyond," Howard said. "Kraft's North American Grocery business will remain one of the largest food companies in the US after the split, with presence in multiple aisles of the store. As such, it will still enjoy very strong negotiating leverage with retailers and deep distribution nationally. This could mean that a good way to create value for shareholders would be to follow Kellogg's lead in its Kashi-acquisition by picking up strong regional brands and scaling them across the company's national distribution infrastructure."


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