Philip Morris & Kraft

2347 Words10 Pages
Executive Summary The late 1980’s was a time of mergers, acquisitions, buyouts, and hostile takeovers for many industries, and the food industry was no different. Philip-Morris made a surprise $11.5 billion bid for Kraft. And three days later, RJR Nabisco Inc. became the target of a proposed $17 billion leveraged buyout by an investor group led by its own executives. In terms of potential impact on the food industry, the Philip Morris-Kraft merger would raise the most dust. If the RJR buyout goes through, the result will probably be a smaller company, as the investors sell off pieces to service their debt. But if Philip Morris lands Kraft, the merged company will be a $37.6 billion behemoth. Through its General Foods subsidiary, Philip Morris already owns brands such as Maxwell House coffee and Jell-O. The Kraft acquisition would give it a huge dairy presence as well, with well-known brands like Breyer’s and Miracle Whip. The combined company would be the world's largest consumer goods company, displacing Unilever, the British-Dutch giant. The prospect makes some lament what they see as yet another nail driven into the coffin of anti-trust enforcement. To others, it means that the American food industry is finally recognizing that, to compete with foreign giants in global markets, it must be much more focused than it now is. But once the commotion has died down, will the merger make a difference to anyone other than Philip-Morris and Kraft shareholders? In the short term, probably not. Kraft is a profitable company, and Hamish Maxwell, Philip Morris's chief executive, has a reputation for letting profitable companies do as they please. Indeed, he has already promised that he will not break up Kraft, fire its employees, or even move its headquarters from Illinois to New York, Philip Morris’s home. However, from the standpoint of existing Kraft shareholders, are

More about Philip Morris & Kraft

Open Document