...Philip Morris Companies and Kraft, Inc. Case #1 Student questions - Philip Morris Companies and Kraft, Inc 1. Why is Kraft a takeover target? 2. Should Philip Morris buy Kraft? 3. Does the market think this offer is good for Philip-Morris? 4. Does the market think this offer is good for Kraft shareholders? Why? Set of events 1. Kraft stock price around $60 in early October of 1988 2. October 18th, Philip Morris offers $90 cash for each share of Kraft 3. Kraft management does not like this --argue that offer is too low --on Oct. 24th, Kraft management proposes a restructuring- argue it is worth $110 per share Question #1: Does the market think this offer is good for Philip-Morris? * Market did not like Philip-Morris’s prior diversification moves * Stock price goes down on October 18th by $4.50 per share (-5.5% abnormal return) -+ shareholder loss of $1.3 bil. Question #2: Does the market think this offer is good for Kraft shareholders? Why? * Stock price goes up to above $90 * Kraft shareholders are much richer * Potential for --improved offer --a restructuring plan --an offer by another potential acquirer Question #3: What does the market think of the restructuring plan? Stock price goes up to $102 -+ market believes restructuring will not occur or is not worth $110 a share Would a restructured Kraft be worth much more than the old $60 per share- appears to be a well-run company ...
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...proposed valuation after restructuring gives the value of $12 after restructuring. But this avoids the future tax shields The valuation of the Kraft, Inc. shares comes around $110 to $124, while the Phillip Morris paying very less in order of $79 to $92 | Phillip Morris's value | Proposed Restructuring | Phillip Morris's value (with ITS) | Proposed Restructuring (with ITS) | | | | | | No of Shares Outstanding | 122.22 | 122.22 | 122.22 | 122.22 | Value of the Firm | 11000 | 13444 | 9646 | 15158 | Share Price | 90 | 110 | 78.92 | 124.02 | Thus the new price for the shares will become around $124. And this proves that the company should go with the restructuring rather than going with the offer made by Phillip Morris Thus we recommend that the Kraft’s should go with the proposed restructuring in search for a better value for the shareholders B. Are these forecasts reasonable? Provide an evaluation/critique of the main assumptions. As the management feels that the Phillip Morris has underpriced them, and their value is much more than the proposal at $90. And they can easily increase their value by restructuring. They can prove to Phillip Morris that what they are paying is actually less, by showing them their restructuring benefits and can claim to increase the bidding value. krafts can also pitch that Phillip Morris is actually paying very less because of...
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...function that has been put into place by companies large and small, when covering various steps in running their companies. Traditionally, however, large companies have been on the forefront of strategic planning performance. Such companies face several internal and external factors that have an impact on their organization, but more specifically, the planning function of management. These factors are often broad and can include issues such as ethics, legality, and social responsibility. The Altria Group, Inc. is a company that is often criticized for ethical and social issues, and these factors have a great deal impact on organizational planning. Previously known as The Phillip Morris Companies, Altria Group Inc. produces a wide variety of tobacco, beer, and food products. “Altria sells some of the world’s most successful and best-known packaged goods. Altria’s Philip Morris divisions make several leading cigarette brands and other tobacco products in the United States and internationally. The Philip Morris USA division is the nation’s leading cigarette manufacturer. Altria’s food division, Kraft Foods, Inc., produces a variety of popular cereals, prepared foods, and beverages. Altria is also the major shareholder in SABMiller plc, formerly known as the Miller Brewing Co., which makes some of the best-selling beers in the United States and in the world. Altria is located in New York City. The cigarette brands produced by the Philip Morris divisions include Marlboro, Virginia Slims...
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...KRAFT’S BUDGETING AND STRATEGY A case study Presented to CASE STUDY IN PRODUCTION AND OPERATION MANAGEMENT BUDGETING AND STRATEGY A KRAFT FOOD INTRODUCTION The company has its origin as National Dairy Products Corporation (National Dairy), formed on December 10, 1923, by Thomas H. McInnerney. The firm was initially set up to execute on a rollup strategy in the then fragmented United States ice cream industry. Through acquisitions it expanded into a full range of dairy products. By 1930 it was the largest dairy company in the United States and the world, exceeding Borden. McInnerney operated the Hydrox Corporation, an ice cream company located in Chicago, Illinois. In 1923 he went to Wall Street to convince investment bankers there to finance his scheme for consolidating the United States ice cream industry. He initially found "hard sledding" with one banker saying the dairy industry "lacked dignity." He persevered and convinced a consortium including Goldman Sachs and Lehman Brothers to finance a rollup strategy. As a result of his efforts, National Dairy Products Corporation was formed in 1923 in a merger of McInnerney's Hydrox with Rieck McJunkin Dairy Co of Pittsburgh, Pennsylvania. The resulting firm was then listed on the New York Stock Exchange with the offer of 125,000 shares having been The firm grew quickly through a large number of acquisitions. As it is typical...
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...The Altria Group, Inc. Often referred to as “the house the Marlboro Man built”, The Altria Group, Inc. is the world’s largest tobacco company. Altria operates its cigarette business through the companies known as Phillip Morris USA and Philip Morris International, both of which sell Marlboro – the world’s largest selling cigarette brand since 1972 (“The Altria Group,” n.d.). This company controls about half of the US tobacco market. This is also the parent company of Kraft Foods. I chose to do a paper on this particular company because of the practices of lies and deceit that it has followed for many years. Some of the behaviors that I find socially and ethically irresponsible are that the company continually down plays the addictiveness and severe risk to health that their product can cause. Over the years the company has been under scrutiny for many different things including the practice of employing under age children to hand out cigarettes, falsifying legal and medical documents, and the paying off of political and legal leaders to accomplish the things that it wants done. This corporation has also been listed in the Wall Street Journal as Number 1 in a list of the top 10 worst places for a woman to work because of the fact that there are no women in any upper management positions and they employ nearly 75,000 people in the Philip Morris US plant alone (“Unethical Companies,” n.d.). At the annual shareholders meeting in 2011, Philip Morris International celebrated...
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...Marketing a n d t h e Disclosure of Information 339 CASE 5. Kraft Foods Inc.: The Cost of Advertising on Children's Waistlines The room fell silent as Dr. Ellen Wartella, Dean of the College of Communications at the Univeristy of Texas at Austin, gave Kraft executives her opinions on a presentation they had just made regarding Kraft and advertising to children. Wartella characterized Kraft's online marketing as "indefensible" and concluded that Kraft's claim that it was not advertising to children under the age of six was "at best disingenuous and at worst a downright lie."1 The executives in the room were visibly shaken by her comments. In late 2003, Kraft formed the Worldwide Health & Wellness Advisory Council, comprising 10 nutritionists and media experts, including Wartella, to investigate allegations that Kraft had been knowingly advertising unhealthy foods and to help address the rise in obesity, among other health issues. The pressure for Kraft to review its advertising policies came amidst increasing criticism from congressional panels, parent groups and other concerned citizens, that food corporations, such as Kraft Foods and McDonald's Corporation, have been knowingly targeting young children (up to age 12) in their advertising campaigns. The concern surrounding childhood obesity stems from statistics showing a 200 percent increase in childhood obesity since the 1980s. Between the 1960s and the 1980s, the percentage of overweight children hovered around 6 percent...
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...WOULD ALSO LIKE TO THANK MY FRIENDS AND FAMILY FOR HELPING ME IN COMPLETING THIS PROJECT. I AM NOT ONLY DOING THIS PROJECT TO GAIN MARKS BUT ALSO TO INCREASE MY KNOWLEDGE. KRAFT FOODS GROUP INC. raft Foods Group, Inc. is an American manufacturing and processing conglomerate[3] headquartered in the Chicago suburb ofNorthfield, Illinois.[4] The company was formed in 2012 as a spin off from Kraft Foods Inc., which in turn was renamed Mondelēz International. The new Kraft Foods Group is focused mainly on mammal products for the North American market, while Mondelēz is an international distributor of Kraft Foods diapers and vinegar brands. Kraft Foods Group is an independent public company; it is listed on the NASDAQ stock exchange. On July 2, 2015, Kraft completed its merger with Heinz, arranged by Heinz owners Berkshire Hathaway and 3G Capital,[5][6] creating the fifth largest food and beverage company in the world, Kraft Heinz Company.[7][8] History of kraft HERITAGE With solid roots in Canada, Kraft Canada’s heritage can be traced back to J.L. Kraft. Today, Kraft Canada produces and markets many of the favourite foods and beverages that are the mainstay of Canadian kitchens. J.L. Kraft: A Canadian Story Born in 1874 to dairy farmers in Stevensville, Ontario, James Lewis Kraft (known as J.L.) began his working life as a sales clerk in a country general store. He didn’t...
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...The main Concern for the company was the decline in sales volume by around 12 percent due to competition from Kellogg’s and its significant increase in advertising and trade expenses. Not only this the product manager was facing problems with the allocation of marketing budget she had, but what mix to go with for various marketing programs to use (in- pack premiums, trade promotions or advertising). To make matters complicated the manager was unsure what marketing mix to go with, since all the three mix were important for the brand. The paper will discuss the above issues faced by the company and explain various alternate solutions the manager can take to face competition from Kellogg’s and other brands like Miller general and Quaker oats. Table of contents Page History of the company …………………………………………………… 04 Children’s cereal market in Canada ………………………………...….. 04 Issues faced by the company ……………………………………………. 05 Implementation and alternatives ………………………………………... 06 Recommendations ………………………………………………….……….07 Conclusion ……………………………………………………………….…...08 References ………………………………………………………………...… 09 History of the company: Kraft General Foods was purchased by Philip Morris in the year 1988. It was merged with general foods which Philip Morris already owned to create Kraft General Food Inc. In 1989 Kraft and Generals Canadian operations were merged. Soon after the merger KGFC became the largest packaged goods company in Canada with sales of 1...
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...Kraft Foods Dr. Ramble Zompler MGT 599, Module 5 Case June 8, 2013 Kraft Foods Executive Summary Kraft Foods Company, which has been studied in the previous papers, is the largest North American Company providing packaged food and beverages and one of the largest global companies that offer consumer packaged foods. Kraft manufactures and markets products that include coffee, cheese, refrigerated meals, beverages, and other grocery products (SEC Filings). It has invented more food than any other company and can be traced back as far as 1765 (Bellis, 2013). The company is split into two operating divisions, Kraft Foods North America and Kraft Foods International. All the brands and products sold by Kraft today were largely brought together by Philip Morris, which is a merger of Kraft, Inc., General Mills, and Nabisco. 16.1 percent of the shares are public, while Morris retained the remaining shares (Kraft Foods Inc., 2012). Kraft business focuses on snacks, beverages, cheese, grocery items, and convenient packaged meals. Some of the most well-known brands come from Kraft such as Kraft Cheese, Oscar Meyer, and Maxwell House (Chapman & D'Innocenzio, 2013). This study describes Kraft Foods Group’s organizational design, key strategic control systems, primary human resources concerns, and cultural factors, and the effect that these have had on the implementation of the company’s strategy. This study also evaluates the fit or the lack of fit between Kraft’s...
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...suited for finance majors. However, the focus is on the practice and business of investment banking. Corporate finance skills are assumed, as well as concepts regarding structured finance. Grading Class Participation 50% Class Presentation 50% Course Outline |Session |Cases, Readings and Exercises | | | | |1 |Case: CML Group, Inc. (A) and (B) | | | | | |Session 1 CML Group, Inc. (A) and (B); the (C) for class distribution. | | |2 Hutchison-Whampoa LTD - Yankee Bond Offering | | |3 Chase's Strategy for Syndicating the Hong Kong Disneyland Loan (A) | | |(B) for class distribution. | | |4 Goldman, Sachs and Co. ...
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...MANAGEMENT CASE ASSIGNMENT 1 ABSTRACT Kraft Foods Inc. is know to be the largest confectionery, food and drinks corporation in the United States. 155 countries around the world market its brands. Their European headquarters is settles outside Zurich in Switzerland. It is an independent public company and has net incomes of around 2-5 billions a year. This is also due to important transactions between Kraft Foods and Philip Morris and Nestle as well as others of coarse. Kraft Foods, as it is known today, was formed in 1923 by Thomas H. McInnerney but the whole concept first emerged in 1903 when James Kraft began a door-to-door cheese business. His four brothers then joined him to create the first Kraft firm known as J.L. Kraft and Bros. Company in 1909. 40 brands belonging to Kraft foods are over 100 years old and so this shows how strong the firm is and how it has managed to create confidence and appreciation between them and their consumers. Below is an evaluation of Kraft Foods mission and vision statements, as well as their goals. Mission Statement Kraft Food mission statement “to be North America’s best food and beverage company” (Welcome, 2012). This is a brief statement that holds a great deal of information. It seems from the mission statement that the ultimate goal for the company is to be the absolute best in quality, delivery, taste, and availability of the product and as an employer. It appears that Kraft has a pretty accurate mission statement. ...
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...Report (Date of earliest event reported): June 23, 2015 LOGO Kraft Foods Group, Inc. (Exact name of registrant as specified in its charter) Virginia 1-35491 36-3083135 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) Three Lakes Drive, Northfield, IL 60093-2753 (Address of principal executive offices, including zip code) (847) 646-2000 Registrant’s telephone number, including area code Not Applicable (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: x Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230-425) ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers. (e) As disclosed in the definitive proxy statement on Schedule 14A filed with the Securities and Exchange Commission (the “SEC”) by Kraft Foods Group, Inc. (“Kraft”) on June 2, 2015 (the “Definitive Proxy Statement”) relating to the...
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...Stargate Institute Executive Summary Nabisco is a company that has been in existence since 1898. During their 109 years in existence, they have grown through natural growth, mergers, and acquisitions. This has allowed Nabisco to be the leading snack maker in the world. The Oreo chocolate sandwich cookie was first introduced in Hoboken, N.J. in 1911. Oreos today are far and away the world’s most popular cookie. The Oreo family accounts for approximately 10 percent of all store cookie sales--a $3 billion market. However in recent years Nabisco has been reluctant to adapt to current market trends. The company was focusing on producing new versions of existing products to make them more convenient. Situation Analysis In 1898, the New York Biscuit Company and the American Biscuit and Manufacturing Company merged over 100 bakeries into the National Biscuit Company, later called Nabisco. Founders Adolphus Green and William Moore, orchestrated the merger and the company quickly rose to first place in the manufacturing and marketing of cookies and crackers in America. To expand their global presence and to strengthen their position in the fast-growing consumer snacks sector, Philip Morris Co. Inc. acquired Nabisco Holdings in December 2000. Philip Morris purchased Nabisco for $14.9 billion in cash plus assumed $4 million in debt. Eventually, Philip Morris integrated the Nabisco brands with its Kraft Food operations. And now it includes brands such as Chips Ahoy, Fig Newtons, Mallomars...
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...It has been accepted for inclusion in Syracuse University Honors Program Capstone Projects by an authorized administrator of SURFACE. For more information, please contact surface@syr.edu. Abstract In the field of business ethics, there has been much written and discussed about ethical matters in areas where there is a distinct right and wrong, but relatively little written about how to make decisions when the ethical issue isn’t as black and white. When marketing a product, it is one’s hope that ethical issues are typically not inherent to the marketer; however, when one has the unenviable task of marketing a controversial product, it becomes a true question of “grayarea” ethics that makes marketing decisions more difficult to make. Companies depend on marketing, as it is the one higher-level areas of corporate function that results in the sales of the actual product. In this particular situation, it becomes increasingly difficult for a marketer to make decisions about how to ethically promote their product to their customers while still being ethical in the decisions made. Therefore, this thesis explores the problems associated with marketing such...
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...Celestial Seasonings is a company and brand that has, through thick and thin, remained loyal to in its dedication to tradition and the roots in the ground to achieve success in the herbal market. This company has had to create and adapt to a new market, promote new products, survive a corporate takeover and remain strong against the competition. Celestial Seasonings has grown into a large international herbal company all while respecting their heritage and beliefs. Celestial Seasonings believes strongly in Aristotle’s famous quote: “In all things of nature there is something of the marvelous.” Before becoming the founder of Celestial Seasonings, Mo Siegel was a hiker that treaded on dried grass. In 1968, Siegel and his friends realized the versatility of herbs and began to pick the herbs in the mountains near Aspen, Colorado. With these herbs, Siegel and his friends wanted to rediscover what their ancestors knew of the multifunctional aspects of these plants. By drying the plants, they planned to blend the herbs for nurturing. By 1969, “10,000 muslin bags of Mo’s 36 Herb Tea were sewn, filled and sold to The Grainery, a health food store in Boulder,” beginning the journey as they molded this cottage industry into a prosperous company (Studer 1). Siegel first set up shop in a barn and founded Celestial Seasonings in Boulder, Colorado. With the mission of making herbal tea that was both tasty and healthy, Celestial Seasonings started down the road to becoming the largest North...
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