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By Jeremy Glaser | 09-08-2009 11:56 AM

Should Cadbury Shareholders Take the Money and Run?

Although Kraft may alter or raise its bid for Cadbury, the confectionery's stock price is rapidly approaching our "consider selling" target.

Jeremy Glaser: I'm Jeremy Glaser with Morningstar. Kraft's surprise bid for Cadbury caught many investors off-guard this holiday weekend. Here to discuss the transaction with me is Consumer Products Analyst, Erin Swanson. Erin, thanks for joining me.

Erin Swanson: No problem, Jeremy.

Glaser: Do you think that this move makes a lot of sense for Kraft?

Swanson: From a strategic perspective, I do believe that it makes a lot of sense from Kraft's perspective. The confectionery industry is a very attractive market with high growth and higher margins relative to other categories within the packaged food space. Further, private label penetration within the confectionery industry is minimal and this transaction would allow Kraft to further broaden its international reach.

Glaser: So Cadbury has more of an international market than Kraft's. Kraft's sales are primarily in the United States right now?

Swanson: Kraft's are about 50-50 right now.

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