http://www.nestle.com/MediaCenter/PressReleases/AllPressReleases/Kraft+pizzas.htm

http://www.marketwatch.com/story/kraft-trading-pizza-for-chocolate-2010-01-05

Nestlé USA has always had a good reputation for providing quality prepared dishes, such as Lean Cuisine.  So on January 5, 2010, it made perfect sense for them to acquire Kraft Foods’ frozen pizza business.  Prior to this, Nestlé had only a minimal presence in the frozen pizza industry.  They believe it is a good strategic fit because it goes along with the research and development that they have already done with other frozen food, such as direct-store-delivery, convenience, and quality.  They are using this acquisition as a way to become major players in the frozen pizza industry, which was about $4.4 billion last year. 

Kraft Foods sold their pizza business for $3.7 billion so that they could afford to buy Cadbury chocolate maker for $16 billion dollars.  Shareholders are unsure if the deal will go through.  However, if it does, chocolate will prove to have a larger profit margin than pizza. 

Why is this acquisition significant?  Kraft Foods is taking a risk.  They are willing to lose a successful aspect of their business for a potentially larger one.  They are losing the trust of their shareholders, while Nestlé is gaining popularity in the frozen food business and also letting around 4,000 previous employees of Kraft keep their jobs.  If the acquisition of Cadbury goes through, we will see the same thing happen.  This appears to be an endless cycle between businesses.