Global Investing

By Dasha Afanasieva

Management consultants often urge their clients to view setbacks or difficulties as opportunities. The cost of reducing environmental impacts are often cited as one such “opportunity”.

But a global study from consultancy BCG and MIT Sloan Management Review has shown that companies are increasingly putting this advice into practice and succeeding in getting the returns.

The study is based on a survey of 2,600 executives and managers from companies around the world and found that the number of companies achieving a profit from introducing changes aimed at making their business more sustainable rose 23 percent last year, to 37 percent of the total.

Nearly half of the companies have changed their business models to try to make the most of sustainability opportunities—a 20 percent jump over last year.

Nor is a preoccupation with sustainability the reserve of the developed world.

Companies in emerging markets change their business models as a result of sustainability at a far higher rate than those based in North America, the study found.

With the smell of Cadbury Cream Eggs and Kraft cheese slices thick in the air, Nestle could well be getting hungry for some M&A. Will the Kraft-Cadbury deal soften the Hershey Trust enough for a Nestle merger?

Nestle has plenty of firepower with $28 billion from the sale of its remaining stake in eyecare group Alcon and Hershey might be seen as no more than a large bolt-on. In addition, Hershey is one deal Nestle could do without big anti-trust issues.

And as David Jones reports, from a Hershey perspective, some heat may be softening the the Hershey Trust's aversion to a deal.

Kraft was always expected to raise its bid for Cadbury, even with no real rival to its initial overture and grumblings from top shareholder Warren Buffett about Kraft possibly overpaying with its stock. The only question was how much. But if it did overpay, it did so with credit. Just in case shareholders were thinking of making a stink, CEO Irene Rosenfeld ratcheted up the cash component to a level that negates the need for shareholder approval.

Dealmakers said the agreement was struck after all-night negotiations in London. It values Cadbury at 840 pence per share. Shareholders will also get a special dividend of 10p per share, bringing the total to 850p per share. That far exceeds scaled-back expectations and was a big jump from the sub-800p levels that had so soured earlier negotiations.

With growing expectations that Hershey would muster a bid around these levels, and all of those high-brow British M&A deadlines clicking into place, getting a friendly agreement had gained urgency going into the weekend. While pundits' palates (beyond those of fondue-chomping Europhiles, if you keep an ear on CNBC) may rebel at the swirling of chocolate and cheese, Rosenfeld has for at least a day gone from looking outflanked by both her own shareholders and grumpy Cadbury executives to a box of chocolate roses.

While Cadbury shares saw some life on hopes for a rival bid from Hershey -- boosted by reporting from the FT that a rival offer was further along than much of the market had assumed -- naysaying analysts and pundits have been quick to point out that the financials of a Hershey bid are hard to stomach.

Hershey is only half the size of Cadbury, and a big share issue would dilute the stake of the controlling Hershey Trust, which has been every bit as crucial to defining the company as the kiss. The FT report says Hershey is working on a private equity element with none other than Byron Trott, Warren Buffett's banker of choice. The idea that Buffett, who is Kraft's biggest shareholder, could play both sides of a bidding war is, if not new, certainly intriguing, particularly given his apparent distaste for Kraft selling its own shares to keep its bid attractive.

And while Cadbury has repeatedly denied it is looking for a white knight, a deal that would leave its management in place, perhaps in exchange for keeping the Hershey Trust intact, could be attractive enough to consider breaking off a piece of Cadbury to give to a private equity investor to chew on ... its gum business, for example.

Warren Buffett may have thrown a monkey wrench into Kraft's bid for Cadbury -- not with his 'no' vote on Kraft's plan to issue 370 million shares to help buy the British chocolate company, but with his scathing comments on Kraft's board for a deal he has long regarded with skepticism. Buffett previously said Kraft's stock was an "expensive currency" for funding the deal, a position he repeated on Tuesday.

Kraft's proposed share issue would give it a "blank check," allowing it to change its offer for Cadbury, Buffett's insurance and investment company Berkshire Hathaway said in a statement. "And we worry very much that, indeed, there will be an additional change from the revision announced this morning."

The statement came hard on the heels of a slight sweetening by Kraft of its $16.4 billion offer for Cadbury. The overall figure is the same, but the cash portion is a bit bigger. Perhaps more telling, it also followed a statement from Nestle shooting down speculation that the world's biggest food group had any interest in getting involved in the Cadbury deal.