Over the course of the battle by Kraft to take over Cadbury, I noted in an entry to this blog, that Kraft were promising to cancel the closure of the Cadbury factory in Keynsham, near Bristol. This appeared to be a philanthropic gesture by the US food conglomerate to safeguard UK jobs and continue the long tradition of confectionery production at Keynsham.
At the time, this was a source of comfort for Cadbury's Somerdale workers. Cadbury had planned to relocate production from Keynsham to Poland. Any protests that might have been expected at the prospect of this iconic British chocolate brand being sold to American owners, were muted in light of the possible salvation of the Keynsham site.
Yesterday, though, brought this particular illusion to an end. Kraft announced that the factory would be closed after all by 2011, with the loss of 400 jobs. Kraft said that plans by the former owners to relocate were so far advanced as to incur significant extra costs if the decision was reversed. They noted that previous management had already committed more than £100m investment in new facilities in Poland, which could be wasted if Keynsham was not shut down.
Looking on, it's hard to believe that Kraft were in the dark about these investments in Poland. For people in the Bristol area, staff and politicians alike, this news was met with disbelief and severe disappointment. It does not augur well for the remaining 6,000 Cadbury workers in the UK and Ireland either.
Ironically, the announcement came as Cadbury's former chairman, Roger Carr, spoke to an audience at the Said Business School in Oxford about his experience of the takeover. He identified some key actions needing to be taken to avoid predatory takeovers of UK firms against the interests of UK stakeholders.
Firstly, Carr said the threshold for a successful takeover should be lifted from 50% + one share, to 60%. Secondly, there should be a rule that anyone buying shares in a firm during an offer period shouldn't be able to take part in any shareholder vote until after the end of the takeover period. In addition, any buyer of 0.5% of a company under offer should have to declare it, rather than the 1% limit as it stands.
Carr thinks that these rules may have prevented so-called 'top-slicing' that took place in the Kraft takeover of Cadbury. In this process, Carr says that more than one-quarter of shares in his firm were bought by speculators betting that Kraft's bid would succeed. These shares, bought at less than the final accepted price, could then be sold for a tidy profit.
In the view of some observers, these actions don't go far enough. For Cadbury workers at Keynsham, they come too late anyway. The same may go for Kraft-Cadbury staff elsewhere, too.