Archive for 2012

M&A – Did Kraft pay too much or did Cadbury accept too low a price?

Friday, January 13th, 2012

I have really enjoyed my Mergers and Acquisitions (M&A) elective with our lecturer Scott Moeller. It has been a fascinating mix of strategy and financial analysis.

For our coursework we had to create a presentation that analysed Kraft’s acquisition of Cadbury.  The acquisition was big news at the time as Cadbury is an iconic British brand and the bidder, Kraft was an American company.

We believed that Cadbury’s strategy to the acquisition was to gain as much value for shareholders as possible by negotiating the best possible price.  The Cadbury board did little to try to defend the takeover and retain their independence.

Some people argue that Cadbury was sold too cheaply and some people thought Kraft paid too much.  To us it seemed like a good deal for both parties; Cadbury shareholders achieved almost a 50% takeover premium which is above the typical 20-40%.  Kraft used the acquisition to facilitate the subsequent split into Global Snacks and North American Grocery businesses, that will in theory unlock more value from Kraft shares in 2012.

Perhaps M&A does not have to be a zero sum game…

View the presentation here.

Thanks to Dio, Omar, Richard, Tim and Yaschica who were co-collaborators on this presentation.

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Gain control of enterprise technology with IT architecture principles

Wednesday, January 4th, 2012

The title for this post is a bit of a mouthful but many companies will feel the need to take control of a spiralling, siloed technology landscape.

Gaining control of your IT architecture begins with the definition of enterprise wide architecture principles and standards. Developing and enforcing these guidelines helps companies maintain the most appropriate and efficient systems, applications and processes, and to minimize unnecessary complexity, duplication, and costs.

Some examples of application architecture principles are:

  • Common use applications (global single instance, ERP, CRM, financial/ HR shared services)
  • Technology independence
  • Maximizing the effectiveness of the end user
  • Adherence to open standards
  • Optimizing and re-allocating IT spend (buy vs. build, virtualization, platform as a service, infrastructure as a service, software as a service)

Without a high degree of collaboration between business and IT leaders, companies probably will not adhere to even the best guidelines. To promote adherence, it is important to show how each architecture principle and standard helps the company to achieve its goals and objectives. Architecture principles and standards are made relevant by connecting them to the strategy of the company. This changes the conversation from “lack of conformance with IT standards” to “lack of support for the company’s strategy” when managers resist complying with architecture principles and standards.

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