Companies can often expand and benefit from acquiring businesses operating in other markets. The Davis Service Group used to be a conglomerate of three main operating companies for tool hire, textile maintenance and building systems. They were all market leaders in the UK but were unable to expand further as each business was within a mature market. In order to improve the return on investment to shareholders the Davis Service Group chose to focus on one business area of textile maintenance and look for ways to grow it overseas by acquisition.
This need to grow affects diverse businesses and in the case of Cadbury it is now planning a surprise European expansion by taking over Leaf International. Leaf International manufactures Chewits and is based in the Netherlands. It is one of Europe's biggest confectionary companies. (The Sunday Times, 5 April 2009).
Leaf has been put up for sale by the private-equity firms CVC Capital and Nordic Capital, which bought the firm in 2004 from the Dutch conglomerate CSM for £800 million. Cadbury is interested in Leaf's operations in Scandinavia and the Benelux countries which make up about 75% of the company's profits. The combined value of the businesses is thought to be around £456 million. However, Cadbury will face competition from other bidders, including Italy's Perfetti.
See the Times 100 case study on Davis Service Group which describes and analyses the growth of the business by acquisition.