As readers of this blog will be aware, I'm not a big fan of mega takeovers.
They usually fail. Costs often go up not down and the resulting disruption can demotivate workers and lead to an executive brain drain as key top staff jump ship rather than facing being ground down by restructuring and upheaval. That brain drain can last for years, as research has shown, and can undermine firm performance.
Kraft's integration of Cadbury now involves them deciding which top bosses from both firms stay on and in what roles. It's being closely watched as Kraft begins the huge job of putting together two big businesses and screwing out enough in the way of 'synergies' (read cost savings) and extra growth to justify the $19 billion spent on buying Cadbury, much to the chagrin of big Kraft shareholders like Warren Buffet (who by the way never had a say on the takeover).
Of course, it hasn't been a very good few weeks for Kraft in the UK. Last week, Kraft's boss Irene Rosenfeld bottled it and didn't show up to face the music at the Select Committee hearing in London.
Her hapless legal boss Marc Firestone had to take the rap instead. MPs gave him a roasting and didn't believe his rather lame excuses when it came to the Somerdale fiasco. I thought his defence was not credible either.
Now we can start to see what Kraft has in store for Cadbury by looking at their executive rejig. There is good news and bad news, depending on your point of view.
A memo from Rosenfeld has told staff in the enlarged group that 12 of the 17 executives from Cadbury's chief executive's committee would stay on at Kraft.
The good news is that all of the operating executives remain in place for now - although the really big test will be how many stay for the longer run. These include Jim Chambers, Cadbury's Americas president, who will run confectionary as well as being the manager of Kraft's "immediate consumption" business in the US.
(By the way I've always struggled with the term "immediate consumption" when it comes to chocolate. My wife can buy the stuff and eat is slowly over weeks whereas I have to scoff the lot, so from my point of view all chocolate is for "immediate consumption").
The flip side of the 'executive selection box shake up' is that nearly a third of Cadbury execs have gone (5 out of 17) and none of the Cadbury execs have made it into the Kraft inner circle, with the Chief Exec's Top 10 Team remaining unchanged and an all-Kraft affair.
As noted in the Financial Times by one source close to Cadbury, "that says this is a bolt-on acquisition rather than a transformational deal... if this was transformational, you would see more of Cadbury's top team reporting in to Irene."
The Rosenfeld memo acknowledges the imbalance in the leadership roles; "in today's announcements about the leadership teams in our global functions, you won't read many Cadbury names. I assure you, however, that once the balance of our teams are (sic) named and the full organization is in place, you will see a good mix of talented Kraft Foods and Cadbury people in our functions and business units, across the organization and around the world."
The point, though, is that none of the top bosses in the combined outfit are from Cadbury. Forget all the corporate guff about 'merger'. This is a takeover plain and simple and Kraft is in full control. One wonders whether Kraft is missing a trick though by failing to tap into Cadbury expertise at the top level.
Remember that Cadbury was leaner and fitter than Kraft and has outperformed its new owner in recent years. If Kraft really want to learn about new markets it should listen to Cadbury bosses.
So Rosenfeld - who hasn't been seen in the UK since the takeover - may be making a mistake by allowing so many of Cadbury's executive team to depart so soon after the takeover, and by not bringing some Cadbury bosses into the inner circle.
The other key point to note in the Rosenfeld memo is the restructuring timetable now in place: "...we'll now look toward our 90-day milestone - staffing the country boards of management, which are the local leadership teams. During this time we'll also determine how and if we'll consolidate any region, area or country office locations or our various research and development facilities. As we move ahead, we'll continue to strive to create a combined organization that truly exemplifies the best of both companies."
Apparently the Kraft mission statement for the Cadbury integration is "more delicious than ever". Hmm, tell that to workers at Somerdale and at the Uxbridge Head Office - the latter face job losses when operations are shifted to the US.
As in all takeovers, securing the support of Cadbury's senior management team is an important part of Kraft's efforts to make a go of the takeover. So far it has made a hash of things over Somerdale, and head office cuts haven't helped.
Above all, Kraft could itself be more 'delicious' by offering better guarantees to Cadbury workers and managers in the UK, especially at the firm's spiritual home, Bourneville.Download the 2009 Warren Buffett Letter & 2009 Annual Report to Berkshire Hathaway Shareholders
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