Credit crunch hits Cadbury's

Poor old Cadbury's. Still unable to shake off the aftermath of last year's salmonella scandal and pressurised by investors into splitting off its US drinks business, it's just become one of the first high-profile corporate victims of the long-awaited credit crunch.

Last Updated: 06 Nov 2012

The same liquidity crisis in the debt markets that caused yesterday's 3.2% drop on the FTSE means that Cadbury's now faces the humiliation of being unable to complete the $7bn drinks biz sale because the private equity consortia who are bidding for it can't raise the debt they need to do the deal. Rather like someone who 'sells' their house only to discover that their 'buyer' has no mortgage in place and fading hopes of getting one, on account of being a self-employed trapeze artist with a bad case of vertigo.

Cadbury's - which also recently announced 7,500 job cuts globally - has said that it is extending the timetable for the sale, having already dropped the price from $8bn to $7bn. It hopes that this will allow 'bidders to complete their proposals against a more stable debt financing market'.

Well, we hope so for their sake but it seems to us here at MT that things are likely to get worse before they get better. You don't have to understand the intricacies of securitisation, collateralised debt obligations and credit default swaps, to realise that the days of cheap borrowing and benign economic circumstances are coming to an end.


Find this article useful?

Get more great articles like this in your inbox every lunchtime

Public failure can be the best thing that happens to you

But too often businesses stigmatise it.

Andrew Strauss: Leadership lessons from an international cricket captain

"It's more important to make the decision right than make the right decision."

Ranked: Britain's best-run companies

These are the businesses rated top by their peers for their quality of management.

Unconscious bias in action

Would you dislike someone just because they’re from the Forest of Dean?

I ran Iceland's central bank in 2009. Here's what I learned about crisis ...

And you thought your turnaround was tricky.

"It's easy to write a cheque you don't have to cash for 30 ...

But BP's new CEO has staked his legacy on going green.