Kraft executives to face further grilling on Cadbury takeover

Kraft’s protracted pursuit and eventual £11.5bn takeover of Cadbury, eventually approved by the latter’s board in January, angered politicians and public alike, when the US group reversed a pledge, made during its bidding for the UK confectioner, to maintain 400 jobs and production at Cadbury’s site in Bristol.

The grilling session scheduled for March 15 follows a probe 12 months ago by the influential parliamentary Committee into the Cadbury takeover, with the MPs involved subsequently publishing a report accusing Kraft of acting “irresponsibly”​ in relation to the closure of the Somerdale plant.

Commitment check-up ​

The select committee has again summoned Marc Firestone, executive vice-president of Kraft, to face questions from MPs on Tuesday morning on areas of the takeover that it has previously outlined needed follow up.

Also summoned to attend next week’s hearing are former Cadbury managing director Trevor Bond, now Kraft’s president of markets, and UK Kraft president Nick Bunker.

The report from the MPs also noted commitments from Kraft, given by Firestone at the hearing, in relation to its intentions for brand management, the Cadbury workforce and the philanthropic activities of Cadbury.

And the MPs stressed, in that publication, that: “Any back-tracking from these commitments, or any evidence that support management and other functions, especially Cadbury’s world class Research and Development, are indeed being transferred to the United States would be a serious breach of trust”​

Another report on the takeover will be published after Tuesday's hearing, added the Committee.

Public debate ​

The public outcry surrounding the Cadbury acquisition opened a debate on how takeovers in the UK are conducted and it also prompted the UK Takeover Panel to issue a rare public censure of Kraft, deeming that the company contravened the industry constituted Panel’s code by going back on promises relating to the closure of the Bristol site.

And the acquisition led to experts and laypersons alike pushing for legal changes to make takeovers of UK plcs more difficult – the bulk of which were considered in an October 2010 report from the executive body, which administers the city code on UK takeovers and mergers.

Lessons from other markets ​

In 2005, following concerns about a PepsiCo takeover of Danone, the French government introduced a law requiring that an acquisition in a strategic sector is subject to prior approval by the Finance Minister. Other measures make a company less vulnerable to a hostile bid, for example, double voting rights for long term shareholders.

While in Germany, driven by concerns about predatory bids, in early 2009 the government there introduced new rules which can limit foreign ownership to a 25 per cent stake.

In addition, Germany also has co-determination whereby management are appointed and supervised by a Supervisory Board which may consist of one third employee representatives.