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Aftermath

  • Nestle submitted a formal offer bid to Acquire Rowntree on May 16th.
  • Rowntree was against the acquisiton offer.
  • Suchard bought more shares after Nestle submitted its formal offer.
  • Suchard made a full bid offer on May 25th to acquire Rowntree
  • Suchard proposed a deal to Rowntree where they would run the combined confection companies in exchange for a 51% stake of Rowntree
  • With more than 40% of its company in control of Nestle and Suchard they decided to open up discussions of Acquisition.

Recommendations

Outlines

  • We recommend Nestle increase its valuation of Rowntree to a sum that the board of directors deems acceptable.

DuPont Analysis

STEP ANALYSIS

1. History

2. Problems

3.Aftermath

4. STEPS Analysis

5. Porter's Five Forces

6.DuPont Analysis

7. Alternatives

8. Recommendations

Social Factors

  • Rowntree had strong position in Continental Europe and the UK.
  • They wanted to acquire Rowntree to tap into that untouched market.

Technological Factors

  • Combining their respective R&D departments would allow them to make better products.

Economic Factors

  • There would be substantial savings for Nestle if they acquired Rowntree.
  • Economic Growth. Nestle combined with Rowntree would have a large market share of the confection industry.

Political Factors

  • Nestle delayed making a a formal bid for Rowntree because it would have allowed Suchard to buy more shares since it was unable to.
  • Suchard couldnt buy more than 30% of Rowntree shares without making a formal bid.
  • Nestle's bid was not referred to the Mergers and Monopolies Committee.

History

Porter's Five Forces

Nestle

Rowntree

Nestle-Rowntree

Rowntree Co. was founded in 1725 in York, England and Rowntree was mainly vendors providing cocoa and chocolate, who sold the business to the Rowntree family in 1862.

Rowntree Co. merged with Mackintosh’s in 1969. So the name was became to Rowntree Mackintosh.

In 1987, Rowntree went public.

In 1988, Rowntree was acquired by Nestle.

Henri Nestle established Nestle company in 1867 in Vevey, Switzerland and his first product was baby food formulas called "Farine Lactee".

Until to 1981, Helmut Maucher became Managing Director of Nestle Co. He solved Nestle's boycott issues, and still work on acquires or merger side.

In 1985, Nestle acquires Carnation

In 1988, Nestle acquires Buitoni-Perngina and Rowntree

In 1992, Nestle acquires Perrier

In 1998, 2000, 2001 ......And so on......

Presented by: Wenqian Li

Julian D Bownes

Christopher Labaere

PROBLEMS

  • Nestle wanted to acquire Rowntree but Rowntree felt it was a good enough company on its own.
  • Rowntree was not onboard with being acquired by Nestle.
  • Rowntree felt Nestle needed them more than they needed Nestle.
  • Suchard owned nearly 30% of Rowntree.

ALTERNATIVES

QUESTIONS?

  • Hostile Takeover

  • Merger

  • Going Suchards route and buying up shares

  • Making full bid earlier to acquire Rowntree before Suchard started buying shares of Rowntree
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