CADBURYS TAKEOVER

Cadburys Takeover



Cadburys Takeover

A cross-party committee of British MPs has accused Kraft Foods Inc. of acting "irresponsibly and unwisely" during its STG11.5 billion ($A19.1 billion) takeover of Cadbury. In a highly critical report on Tuesday, the Business Select Committee said that the controversy surrounding the deal would have long-term implications for Britain's takeover laws. The months-long hostile battle by Kraft, based in Northfield, Illinois, to win the 195-year-old British confectioner dominated headlines in Britain, where Cadbury is a much-loved brand, amid criticisms about the US company's tactics.

The Business Select Committee said that Kraft's promise to keep open a British factory - only to announce its closure after the takeover was completed earlier this year - had left the company open to charges of either "incompetence" or a "cynical ploy" to win support for its bid. "Kraft acted both irresponsibly and unwisely in making its original statement that it believed that it could keep the Somerdale factory open," the report said. "Its actions have undoubtedly damaged its reputation in the United Kingdom and has soured its relationship with Cadbury employees," it added.

"Kraft will now have to invest significant time and effort into restoring its reputation and regaining the trust of the public, its UK work force and government and ourselves."

Kraft Executive Vice President Marc Firestone apologised to MPs when he gave evidence to the committee in London last month, saying he was "truly sorry" for the uncertainty caused by Kraft's backtrack on the factory in Somerdale, western England.

But his apology was met with scathing comments from MPs about Chief Executive Irene Rosenfeld's decision not to attend the inquiry's evidence session herself. Brian Binley, a member of the opposition Conservative Party, said her absence was a "sizable discourtesy."

Kraft's pledge to keep the plant open, saving 400 jobs, would have reversed earlier plans by Cadbury to close the factory and move production to Poland. The US company said it changed its mind once the deal was completed, announcing the plant would close by 2011, because it had become clear that it was "unrealistic to reverse the closure program."

"The discussion of the UK job situation has been very exaggerated," Rosenfeld said. "We actually expect this will be a net positive for the UK." Cadbury's leaders will leave; Chairman Roger Carr and the board will go after certifying Cadbury's 2009 results. Cadbury CEO Todd Stitzer and Chief Financial Officer Andrew Bonfield will help Kraft integrate Cadbury into the Northfield, Illinois-based food maker, but will step out of the direct chain of command, Rosenfeld said.

Cadbury's workers gathered in central London as the votes were counted to urge the government to protect Cadbury's British workforce and future investment at its British sites as they join with Kraft's 98,000 global staff. The Kraft-Cadbury combination brings together Cadbury's Dairy Milk chocolate, Halls cough drops and Trident gum with Kraft's portfolio of Milka and Toblerone chocolates, Oreo cookies, Maxwell House coffee and Philadelphia cream cheese. Once Kraft gains 75 percent of Cadbury's shares, it can delist ...