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Kraft 'acted irresponsibly' in Cadbury takeover

6 April 10 18:39 GMT

US food giant Kraft has been criticised by MPs over the way it handled its takeover of UK chocolate maker Cadbury.

Kraft acted both "irresponsibly and unwisely", a report by the business committee said.

The report follows a hearing last month in which Kraft apologised for pledging to keep open Cadbury's Somerdale plant in Keynsham, which is now being closed.

Meanwhile, the Unite union has urged Kraft chief executive Irene Rosenfeld to meet Cadbury workers face-to-face.

Reputation 'damaged'

The MPs' report said: "We conclude that Kraft acted both irresponsibly and unwisely in making its original statement."

When Kraft announced its bid for Cadbury last September, the firm said it believed it "should be in a position to continue to operate the Somerdale facility".

It reiterated that statement in its offer document to Cadbury shareholders in November.

The MPs said: "By doing so, Kraft has left itself open to the charge that either it was incompetent in its approach to the Somerdale factory or that it used a 'cynical ploy' to improve its public image during its takeover of Cadbury.

"Its actions have undoubtedly damaged its UK reputation and has soured its relationship with Cadbury employees."

Kraft has argued that it fully intended to keep the Somerdale plant open, and only reneged on the pledge once it found out that Cadbury had already spent tens of millions of pounds fitting out a new factory in Poland.

Some observers defended Kraft's pledge, saying it could not have known the full extent of Cadbury's investment.

"[Kraft] could not get into the factories or ask questions directly. I question as to what more they could do other than sending spies into the factories asking questions and taking photographs," William Charnley, partner at law firm Mayer Brown, told the BBC.

The closure of the Somerdale factory will result in the loss of 400 jobs, with production moving to Poland.

Takeover debate

The committee also said that it was disappointed that Ms Rosenfeld did not give evidence in person.

Committee chairman Peter Luff said the controversy surrounding Kraft's takeover of Cadbury had "rightly opened a debate on how takeovers in the UK are conducted".

"That debate must continue, as a matter of urgency, in the next Parliament," he added.

Jack Dromey, deputy general secretary of the union Unite, repeated calls for a "Cadbury law" banning hostile takeovers of successful British companies by overseas multinationals.

"Never again should the short-term interests of shareholders and the hedge-fund boys in red braces making a quick buck come before the long-term interests of household-name British companies and the thousands of jobs and families these companies support," he said.

Kraft spokesman Michael Mitchell said that his company "acted in good faith" during the bid process.

"We would ask people to judge us by the firm commitments that we've given the committee on investment, manufacturing jobs, brands and community investments," he added.

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