Political fallout over Cadbury’s deal
The recommendation by Cadbury’s management that shareholders accept the terms of the £11.5bn Kraft takeover bid led to an explosion of opposition amongst local and national politicians and industry observers.
The role of the now publicly-owned RBS in the deal came under fire from Lib Dem leader Nick Clegg, who said it was “plain wrong” for the bank to be funding the deal when it could lead to the loss of British jobs. The UK government owns 84% of shares in RBS following its bail out of the bank in October 2008.
Prime Minister Gordon Brown said the government would do everything it could to protect jobs.
But Treasury minister and MP for Birmingham Hodge Hill, said in a blog post he was ‘gutted’ about the Kraft deal.
Elsewhere, attention focused on major Kraft shareholder Warren Buffet’s opposition to the deal. He was reported as saying the deal left him ‘feeling poor’.
Buffet, who owns 9.4 per cent of Kraft, told CNBC he would vote against the deal if given the chance. Kraft shares fell 68 cents to $28.73.
Birmingham City Council has signalled its strong oppsition to the Kraft buyout of Cadbury’s, accusing the US food giant of trying to ‘make a quick buck’.
In a video statement, Cllr Neville Summerfield, Cabinet Member for Regeneration at Birmingham City Council, urged Cadbury’s shareholders to reject the deal agreed between the management of the Bournville company and US firm Kraft.
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Cllr Summerfield said: “Following the recent ‘lift, shift and burn, by foreign investors of Birmingham based LDV, this proposed takeover would be a terrible blow for the city and could lead to the latest in a long line of closures of iconic British companies brought about primarily to benefit overseas based self interest..
“In considering this offer I sincerely hope the shareholders think about the longer term financial benefits gained by staying independent rather than choosing to take the short term quick buck from struggling KRAFT.
“There is much at stake in the next couple of weeks not just for Birmingham, but also for an iconic symbol of British industry and through it the industrial future of the entire country.
“I’d therefore urge the shareholders to think very carefully before rushing to a decision.”
And Legal & General, Cadbury’s second-largest shareholder was also unimpressed by the new Kraft offer.
Legal & General Investment Management (LGIM), which holds 5.1 per cent of the Bournville firm, said Kraft’s 850p cash-and-shares bid was not in the long term interests of the company as it did not reflect the future value of the confectioner.
Mark Burgess, LGIM’s head of active equities, said: “We are disappointed management have recommended the offer for this iconic and unique British company, but are grateful for the constructive way they have engaged with us throughout the process.”
