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Cadbury Schweppes

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Industry Analysis: Cadbury Schweppes (CS) is comprised of a global confectionery and beverage company. For the purpose of this case we will maintain our focus on the confectionery business and the assessment of adding to their sugar confectionery portfolio. CS is number three in the beverage business but see the opportunity to become the largest confectionery in the world. The categories are chocolates, sugar and chewing gum. At this time Adams is the number two sized in the gum business. This industry operates on “bigger is better in confectionery”. Their strategic discussions and ambitions appear to stay true, in mentality, to this mantra. This mantra could be potentially dangerous to the business. CS had a presence in over 70 …show more content…

Recommendations: Although Adams has clear benefits should the acquisition go through and the Adams strengths would seemingly be a perfect fit for Cadbury Schweppes. I do not assess Cadbury, at this time to be in an ideal situation to acquire Adams. As well, Adams may not prove as lucrative an acquisition that it appears to be. The pros to the Adams acquisition are that CS would more than double its share of the global sugar confectionery market making it the largest sugar confectionery. The key effect would be that CS would then contest Wrigley’s global dominance. Moreover, the acquisition would allow Cadbury Schweppes to go to the front of the grid in the confectionery market. The acquisition would appear to be valuable to Cadbury Schweppes as Adams had higher sales than it in a number of important regions such as Latin America.
However, regardless of the obvious benefits for Cadbury Schweppes, the acquisition presents significant risks that to me outweigh the grandiose potential of becoming number one. Not only would CS being overpaying for Adams but it appears to not be as profitable after the acquisition takes place. Adams would lose $15M in back office services it currently provides. While it is believed there would be a strong cultural fit at these two companies, CS was not prepared to provide leadership for the merged companies in the expanded Americas

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