Given that a hefty 26% of that 30% revenue rise was down to Cadbury in the first place, it seems a little harsh to lay the group’s troubles so firmly at its door. But post-merger integration, as any student of corporate life knows, is a tricky and expensive business, so there may some truth in what Rosenfeld says. Although of course Kraft stands to make savings in the long-run, by dint of enlightened wheezes like reducing its tax liability by making Cadbury’s part of a Swiss-based subsidiary.
But you might also think that Kraft can’t really claim that the costs, however onerous, can really be a surprise. Making such a public point of them is unlikely to improve relations between the two sides of the controversial merger.
It all looks depressingly like the familiar and destructive cycle that occurs in the wake of many a difficult takeover. Having got its hands on the target company, the acquirer quickly realises that many of the qualities which made it look like a tasty buy in the first place, also make it very difficult for the two firms to ever really become one.
All those fluffy sounding things like culture, values and fit which don’t get much of a look in when the suits are running the numbers on the deal in the first place, come well and truly home to roost once the ink is dry and the deed is done. Frustration and recrimination duly set in, with the risk that the whole ends up being rather less than the sum of its parts. The truth is that integration takes longer, costs more and often delivers fewer benefits than most management teams (on either side of a deal) realise.
To add insult to injury. Kraft also described Cadbury’s commercial performance as disappointing. Like for like revenue growth of 2.2% may not be spectacular, but given the state of Cadbury’s key UK and European markets it could have been a lot worse.
The Kraft/Cadbury deal is barely a year old, but it looks like the honeymoon period, if there ever was one, is now well and truly over.