Matt Roche | Marketing

Valuing a company like Cadbury is a tricky business. They have been trading as Cadbury for over one hundred years, and in fact, their history can be traced back nearly two hundred years when John Cadbury first opened his tea and coffee shop where he started to experiment with cocoa drinks.

Kraft, the American food and confectionary business, have made an initial offer to buy Cadbury as it feels that the joining together of the two firms would be strategically perfect in its quest to take on Master Foods (Mars) and other big players in the market. If Kraft were to be successful with their bid for the confectionary and drinks business, they would have a global powerhouse with sales of over $31 billion annually.

The question is: how can you value a company like Cadbury? Kraft made an offer of just over £10 billion. However, with over a hundred years of trading, a global mega-brand and millions of loyal consumers, what figure can possibly be appropriate for such a business?

When we think of the dot com boom and the ludicrous numbers that were bandied about when people thought that web companies were the answer to a rich future, it seems bizarre that a company like Cadbury with such a long  history – and a proven track record of profitable success – would be valued at such a relatively low figure. When one considers the potential revenues of such a company over the next hundred years, £10bn seems somehow wrong. Especially when there are tech companies like Facebook and Twitter which both have perceived values far higher, but no clear revenue model for sustainable profit over the next year, let alone one hundred.

Cadbury is very close to the nation’s hearts. No one wants Cadbury to be sold to make a conglomerate organisation that will no doubt be looking to cut costs, and therefore jobs.

Cadbury have redirected all of their web properties to  thier investors site, where they have published a statement suggesting that they are not considering any offers at the moment and that they feel Kraft’s proposal massively undervalues the group. It now remains to be seen whether Cadbury will be more willing to consider an offer at a higher level.