CHOCS AWAY FOR CADBURY BID

09-11-2009

If, as expected, US food conglomerate Kraft launches a hostile bid for Cadbury’s today, expect the usual wailing and gnashing of teeth about the potential loss of another great Birmingham brand overseas. But companies who play with the market can’t expect to be immune from market forces.

The Takeover Panel has told Kraft to “put up or shut up” after their previous £10bn takeover offer was rejected – and today marks the deadline for a new bid.

There's a fear that if Kraft is successful, a substantial part of their production base will be shifted overseas - putting thousands of jobs in Bournville at risk.

We earnestly hope that won't be the outcome, whatever happens with this mooted takeover.

But let's not forget that as the world’s largest confectioner Cadbury already has a global production base, with factories in far-flung corners of the world.

What's more, during the two decades of its merger with Schweppes (1989-2008) the company hungrily snaffled up brands like Ty-Phoo Tea and Sunkist, as well as licensing the manufacture of Hershey bars.

Now the biter could be bit, with Kraft on the prowl – and shareholders are unlikely to give two hoots for the job prospects of thousands of Brummies.

They will only be looking at the bottom line – never mind that 10 or 15 years down the line, the quality of a great brand may well have been eroded.

The argument that Cadbury’s investors haven’t been getting maximum value for money also deserves to be heard.

US shareholder activist Nelson Peltz has long insisted that the company could be run more efficiently and it was the involvement
of his Trian Fund that provoked the demerger with Schweppes last year.

That left Cadbury free to focus exclusively on confectionery.

Peltz also has a stake in Kraft, and is thought to have encouraged its board to expand its sweet and chocolate interests.

In this predatory, cost conscious environment, appeals to patriotism and the great Bournville heritage count for nowt.

It’s purely a numbers game – and the citizens of Birmingham will be praying the current board can make those figures add up to a rejection of Kraft’s latest bid.

Also see krafty-assault-on-cadbury

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