Merger is a voluntary amalgamation of two firms on roughly equal terms into one new

legal entity. Mergers are effected by exchange of the pre-merger stock (shares) for the
stock of the new firm. Owners of each pre-merger firm continue as owners, and the
resources of the merging entities are pooled for the benefit of the new entity. If the
merged entities were competitors, the merger is called horizontal integration, if they were
supplier or customer of one another, it is called vertical integration. The new merger
between Heinz and Kraft a horizontal merger. The formation of The Kraft Heinz
Company its a mega-merger which is uniformly positive, as analysts see the deal as a
logical response to an increasingly cost sensitive consumer market and an underperforming, if not stale brand portfolio at Kraft . The deal comes as Kraft and other major
U.S. food makers struggle with changes in consumer tastes that have hampered their
ability to sell packaged, processed food. The newly formed food conglomerate will be
named The Kraft Heinz Company the third largest food and beverage company in North
America and the fifth biggest in the world. Kraft is the parent company of Cadbury which
acquired Cadbury in 2010 .

IMPLICATIONS OF THE MERGER ON CADBURY IN NIGERIA

There are several implications the merger between Heinz and Kraft to Cadbury Nigeria,
which has its parent company, has Kraft. Firstly its good to note the reason for the
merger, which is basically as a result from of declining sales and profit margins at Kraft
Foods. The company was reportedly under pressure from its shareholders to transform the
$18.2 billion corporation after its gross profit slipped by 17 percent in 2014. The
following are some of the implications of the merger to both shareholders, staffs and

consumers of cadbruy Nigeria

SHAREHOLDER PROFIT MAXIMIZATION

During the ongoing conversation before the merger, John Cahill, Kraft Chairman and
Chief Executive Officer stated that This combination offers significant cash value to the
shareholders and the opportunity to be investors in a company very well positioned for
growth, especially outside the United States, as we bring Krafts iconic brands to
international markets. We look forward to uniting with Heinz in what will be an exciting
new chapter ahead. Beyond the profit maximization for shareholders, there are other
impacts of extended chain distribution of goods to final consumer
CUTTING OF JOBS
While no job cuts have been publicly announced, there is no doubt among industry
analysts that thousands are coming. In a recent article entitled Kraft-Heinz Synergy:
How Many Job Cuts Equal $1.5B? Bloombergs merger and acquisition analyst
concluded that the majority of the projected savings from the merger would come from a
lot of job losses.
Heinz currently has about 6,800 employees in North America and Kraft has 22,000.
According to Business Insider, the synergies of the deal are likely to result in 5,000
people losing their jobs.
Zero-based budgeting does not stop at dramatic job elimination. According to the Wall
Street Journal, one chicken processing company that adopted the system scrutinized...
how much soap employees used to wash their hands, and how much Gatorade hourly
employees at one processing facility drank during breaks.

Each year, managers are forced to justify every expenditure their division makes as
absolutely necessary, as opposed to relying on previous budgets as a guideline. This has
led some companies to challenge employees if they asked for simple things like
flashlights or color copies for business purposes. Bloomberg Business, speaking about
Burger King, could not help but describe the system as creating an oppressive
cheapness.
The prospect that Kraft could apply the same regime of layoffs, closures and austerity
elicited an ecstatic response from speculators on Wednesday. Krafts stock jumped 32
percent in early trading. The massive stock surge is a sign of the policies favored by Wall
Street: job elimination, mergers, and austerity
COMPETITIVENESS
When employees are concerned about their own job security they are more likely to
become competitive with others and this competitiveness can result in conflict-sometimes-even violence. During mergers and acquisitions it is important for managers
and HR professionals to be alert to signs of negative competition and to ensure that
employees are being kept informed about impacts on their jobs and their futures with the
company. While some competition is good, competition is not good when it creates
tension and negative conflict in the organization.
. However there are several negative implications that might arise has a result of the
merger to Cadbury Nigeria. Such which is not limited to the under listed .

There would be some de-motivation amongst the staff, which may lead to low
morale, and thus reduce the productivity of the company, thus decreasing the

profit
There is also a risk of resignation due to change of process, e.g. technology
There might be lack of trust, which would lead to weak loyalty, and thus reduce

open communication amongst the staff

There might be an increase in conflicts, which would lead to stress and increased

emotion
There might be feelings of insecurity and uncertainty of future amongst the

employees
This may also lead to a risk of diminishing Cadbury's brand

IMPLICATIONS OF THE MERGER ON NIGERIA CONSUMERS

Reviews of the mega-merger are uniformly positive, as analysts see the deal as a logical
response to an increasingly cost sensitive consumer market. From a supply management
perspective, the merger also makes a lot of sense. Both firms have mature and
sophisticated supply chain cultures that will prove easy to integrate. Kraft and Heinz
are already at the top of the food chain. Their merger means more market leverage and
history says theyll know where to look and how to operationalize what they find. Each
organization has embraced the use of advanced analytics in their supply management
operations and each is fully committed to the data driven decision processes they enable.
For consumers, this may likely mean less competition to lower prices, which makes it
even more difficult for consumers to have a competitive market for food. This merger
would likely reduce the home based Nigeria competitors and make a foreign company
more dominance . it cannot be denied that it would create a wide variety of brands for
consumers to reach marginal utility .
RECOMMENDATION

The federal government of Nigeria should review her fiscal policy and
enact laws to protect our local firms against big mergers such as this,
so that they compete favorably in the same industry. Also the federal
government can make a soft loan for indigenous investors who are in
the line of business to give them competitive advantages as well.

Reference:
http://ausfoodnews.com.au/
http://smallbusiness.chron.com
www.bizjournals .com

UNIVERSITY OF LAGOS Akoka-Yaba, Lagos A PAPER ON: H.J

HEINZ CO. & KRAFT FOODS GROUP MERGER; THE
IMPLICATIONS ON CADBURY NIG. PLC AND MARKETING
IMPLICATIONS FOR CONSUMERS IN NIGERIA. (BUS 841) BY
AFOBUNOR AFORFEM MATRIC NO. 149023159 DEPARTMENT
OF BUSINESS ADMINISTRATION (MSC. MARKETING) Lecturer:
Dr. ONIKU AYO 28th APRIL, 2015