Discussing on the issue why management of the Kraft Foods has decided to acquire the British company Cadbury, we need to analyze this deal from various standpoints including production, marketing and finance. AS VP of Finance at Kraft, I am greatly concerned about how this acquisition will affect our performance on domestic as well as international markets; thus, this blog entry will discuss and reflect on what benefits Kraft should expect from this deal. Needless to say, Kraft should only be engaged in this deal if there is certain increase in profits, future prospects for growth as well as expansion of the production.

There are obvious advantages to our company should Kraft acquire Cadbury. First, by acquiring Cadbury, Kraft could become the largest food company and significantly increase its market share. Not only will this deal allow Kraft to dominate in the food industry, but it will also open the door to targeting other industries that would strengthen our current positions. After the acquisition, we expect the stock price to increase significantly and in doing so, this deal will, secondly, benefit our shareholders by increasing their equity value and distributing free cash flows in forms of dividends or stock repurchases. Third, this acquisition may attract potential outside investors so that Kraft Foods can finance its operations through more debt and equity financing. Since Kraft needs to retain most of its free cash flows, it is crucial for us to stabilize ways of external financing.

Sincerely,

Alexander Tyan (Sasha)

VP of Finance