Confectionary Market Muses upon More Mergers
Posted on April 29, 2008 in Business and Finance by Shewli
Warren Buffet, one of the world’s most patient investors is investing in the confectionary market as Mars and Wrigley merge. Buffett is investing in Wrigley. This merger is believed to urge Cadbury to buy Hershey, a confectionary giant. 78% of Hershey’s stocks is owned by Hershey Charitable Trust and the CEO of Hershey had quit unexpectedly after the community vetted the sale of Hershey.
The Mars-Wrigley merger is going to oust Cadbury from the world’s top position in the Confectionary business just at the moment when Cadbury is planning to demerge from its soft drinks business in London.
The merger happens most of the time with cost savings in mind but Buffet’s Proctor and Gamble merged with Gilette with the purpose of accessing the wide distribution networks that Gilette has.
Mars is a family owned business and its income comes from pet foods apart from confectionary brands. Wrigley’s has a wide distribution network overseas and though Cadbury competes with Wrigley on global gum business, in which, Wrigley’s earnings are more than Cadbury’s.
Now in the field of Technology, Microsoft failed to bring Yahoo over the negotiating table as all of us watched the deadline pass by. Now the confectionary business is heating up with Buffet entering the picture. Buffet enters into the picture not to clean up but to reap maximum benefits.
If Hershey is taken over by Cadbury, the former would get access into international market but without its global presence it ensures that it will not overlap Cadbury products. Whether the Mars-Wrigley merger is going to insinuate Cadbury into re-opening talks with Hershey, the biggest chocolate maker in US or not remains a big suspense.
Business these days is very complex. Success factors nowadays depend on three factors like environment performance, social performance and financial performance.
» Filed Under Business and Finance