Kraft management predicts that the $50 billion combined company will be able to save $675 million over three years, but that’s not the primary reason for the merger. It’s all about global distribution and access to developing markets. Cadbury has it, Kraft wants it. Makes sense on paper.

Most mergers do make sense on paper, yet many become spectacular failures. The reason? A lack of appreciation for just how difficult it is to integrate not only global operations, but two proud and independent workforces.

Kraft is going to face this problem in spades with Cadbury. Todd Stitzer, Cadbury’s CEO, said that Hershey’s would have been a better cultural and operational fit. The company’s Chairman, Roger Carr, took it a step further by saying Kraft is “an unfocused conglomerate” with “unappealing categories” and management that “underdelivers.” Carr went on to say, “There is no strategic, operational, managerial or financial reason” for the merger.

Sure, Carr’s statement may have been a bit of strategic bluster to raise the value of the offer (which he succeeded in doing), but it sounds pretty categorical to me. And it was telling that not a single Cadbury executive was present on the conference call with analysts to discuss the deal. Hmm.

Kraft estimates it will take $1.3 billion to “integrate Cadbury.” I’m not sure exactly what that means or who came up with the number, but I don’t know how anybody could forecast the costs associated with the fear, resentment and internal jockeying with which Kraft and Cadbury managers and employees are now having to deal. The fact that Britons consider Cadbury a national treasure that has been overrun by ugly Americans sure won’t help.

Let’s hope Kraft doesn’t end up with a stomachache.

January 10, 2000 (CNNfn):“In a stunning development, America Online Inc. announced plans to acquire Time Warner Inc. for roughly $182 billion in stock and debt Monday, creating a digital media powerhouse with the potential to reach every American in one form or another…’Together, they represent an unprecedented powerhouse,’ said…a media analyst…’If their mantra is content, this alliance is unbeatable. Now they have this great platform they can cross-fertilize with content and redistribute.’”

May 29, 2009 (LA Times):“Time Warner’s rocky marriage to AOL is coming to an end. Citing irreconcilable differences, Time Warner Inc. said it was legally separating from its much younger spouse, America Online. The marriage, which was announced to great fanfare in January 2000, had been on the rocks practically from Day One — doomed from the get-go by lofty expectations of a new power couple that could dominate the media landscape for generations to come…The new Time Warner was applauded by analysts.

So “analysts” thought the AOL/Time Warner merger was brilliant. Until they didn’t anymore. Just goes to show that you can’t believe everything you read.

Make your decisions based on what you know, not what they think.

On the other hand, it could be a big flop. Java accounts for a small percentage of Sun’s revenue, the bulk of which comes from hardware in which Oracle has precious little experience. Oh, and Sun’s hardware business is currently unprofitable.

Let’s not forget that companies like Sun, Oracle and IBM are run by larger-than-life CEOs who are continually trying to out-maneuver one another for competitive advantage (and bragging rights). It’s possible that Oracle’s interest in Sun was piqued by IBMs overtures, and only then did they find a way to justify doing the deal. Very few decisions in business are completely rational–especially decisions of this magnitude and urgency, around which the adrenaline can’t help but flow.

I’m no computer industry analyst, so I will leave the professional prognosticators to analyze how a purchase that will take a big bite out of Oracle’s margins may be overcome by giving them a leg up in software development. What I will say is this: when companies of this size and importance merge (particularly in industries as competitive as hardware and software) in an economy this unstable, issues surrounding consensus, focus and consistency are sure to arise. As I detail in When Growth Stalls, these are the unexpected internal dynamics that often take companies down.

I wouldn’t be surprised if a year or two from now we were reflecting on the acquisition that should have worked, but didn’t. It’s all too common when growth stalls.

Why? Well, the most obvious reason is that this could be Microsoft-Yahoo all over again. IBM knows it’s in the catbird seat and that Sun doesn’t have a lot of options. More important, however, is what seems to be happening inside of Sun when you read between the lines of the news reports. The company appears to be suffering from at least two of the destructive internal dynamics I spell out in When Growth Stalls.

–Lack of Consensus. CEO Jonathan Schwartz and Chairman Scott McNealy are reported to have taken opposing sides in evaluating the wisdom of a deal. That’s not a minor disagreement, and it reveals deeper issues about how each views the company and its challenges. All is not well in Sun Microland.

–Loss of Focus. Sun has always been a hardware company. Schwartz has of late tried to shift the company’s focus towards software. At this point it appears to be caught in between while having to endure a very unforgiving economic environment.

When a company loses its focus and has issues in the boardroom–and then becomes a runaway bride–you have to wonder if what’s going on inside is worse than it appears. Especially when the company issues a statement that it’s “committed to its leadership team, growth strategy and building value for its shareholders.” Methinks they doth protest too much.

That said, if I was to counsel IBM, my advice would be to walk away and not turn back. As When Growth Stalls makes clear, acquisitions are usually a bad idea, especially if there’s dissent within the walls of the target company.

I’d love to be a fly on the wall at Sun’s board meeting today. If I was, I’d do everything I could to create a buzz in favor of selling. The company doesn’t have a lot of good options, but in my mind that’s the best one for shareholders.