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Cadbury: banks are the real winners

Robert Peston | 13:48 UK time, Wednesday, 20 January 2010

Cadbury's defence document against the takeover by Kraft, published at the end of last year, contains the following statement:

"The amount of fees which would become payable to the banks in the event of a transaction being completed with Kraft (or another third party that makes an offer for the company during the offer period) are higher than those payable if no transaction is consummated".

What this means is that Goldman Sachs, Morgan Stanley and UBS - the banks hired to "defend" Cadbury against Kraft's hostile bid - are to be paid more for selling Cadbury to Kraft than for preserving its independence.

So success, as defined in their contracts, is what happened on Tuesday - an agreement that Kraft would buy Cadbury.

Is it any wonder therefore that Cadbury has surrendered its independence? As one City veteran said to me: "you get what you pay for".


The nature of Cadbury's contract with the banks surprised me - especially in view of the rhetoric of Cadbury throughout the takeover battle that it had an exciting and viable future as an independent business.

And I have checked out my intuition that the incentive structure for the banks is a bit odd by talking to a number of City grey beards.

They too were a bit bemused that Goldman, Morgan Stanley and UBS were being rewarded to complete a sale of Cadbury.

It was perfectly open to Cadbury, for example, to pay the banks a so-called success fee simply for securing an increased offer from Kraft, regardless of whether the takeover is actually completed.

Actually when I first started as a cub reporter more than 25 years ago, it was the norm for defending banks to receive maximum fees for keeping a business independent.

This practice was abandoned a few years ago, because investors viewed it as counter to their interests.

But some would say that paying your advisers to sell your company, rather than to maximise the share price (which is not the same thing), surely tilts the playing field too much to the advantage of the bidder (and for other reasons the playing field is already skewed in favour of acquirors).

Comments

  • Comment number 1.

    Robert,
    Do you ever worry about spending too much time with these leeches?

  • Comment number 2.

    And what did the grey beards say about Nick Clegg's excellent point at PMQs today that RBS will be lending money to Kraft to enable them to reduce the number of employees working for Cadbury in the UK? Oh and what about the bonuses that will be paid to these hard pressed banking employees for constructing this deal? Sounds like the silly season has come upon us earlier than normal.

  • Comment number 3.

    Will Hershey now take over Kraft. The level of borrowing to buy up Cadburys does seem to stretch Kraft's ability to pay the loans, well that what is seems to me.
    Overall it appears that only the banks win again.
    Advising to sell, lend the cash, and advising the shareholders to buy. Or am I being much too simplistic?

    And another thread, why are there only big companies around? Could it be the banks cannot be bothered to lend to small firms because they only want large monies to be moved around not the small, petty cash of the small firm?

  • Comment number 4.

    This is another example of our transaction based economy, or transactions for transactions sake, regardless of whether it's the best action to take.

  • Comment number 5.

    Banks are the real winners right across the economy; everybody else is a loser.

  • Comment number 6.

    quelle surprise.

  • Comment number 7.

    So last Week Mandy and Brown both said they would work with the firm to save it.

    Now we discover that our bank "RBS is onle of the bigest lenders" to Kraft and they and other banks will pocket hundreds of millions in fees and consaltancy payments.

    Oh well im sure its better for UK PLC if RBS makes a profit and we lose several thousand UK jobs!

    Why when every Brown says he will intervine do companies disapear: Rover, Woolworths and now Cadburies!

  • Comment number 8.

    One story for the public a different one for the wallet.

  • Comment number 9.

    We can now correctly clasify the banks as fifth columnists!

  • Comment number 10.

    Goldman Sachs again, hey. So long as they are the winners, we're always be the losers!

    1. At 2:05pm on 20 Jan 2010, Kit Green wrote:
    Do you ever worry about spending too much time with these leeches?
    --------------------------

    In fact, they need people like our Robert and his blog where we can vent our frustration freely. Relative freedom of speech has proven more beneficial for the rulers than total censorship.

    Fake democracy is the new enslavement!

  • Comment number 11.

    #2 ARHReading

    Good point about Nick Clegg's comments at PMQs, but Gordon simply played the 'Liberal Democracy Card' on him just to mock him in the Den of Thieves.

    The more this continues the more I believe JadedJean and WOTW were/are calling it all just how it really is!

  • Comment number 12.

    From now on the taste of chocolate will be "Yuck"!

  • Comment number 13.

    So when Mandelson said yesterday that he had 'no power' to stop the take-over of Cadbury's (which is incorrect as the UK must still retain some sovereign powers?) - he was correct in the sense that the 'financial priests' had already sealed the deal.

  • Comment number 14.

    It was a Parliamentary Discussion on Fiscial something or other, Robert. And I thought of you - after 40 minutes of thinking of Ms Flanders first. Sorry, mate. Anyway - during it - Bill Cash (Conservative. Stone) admitted just now to being a "sort of cousin" - was it - to the Cadbury family group. My goodness I thought. There were REAL losers too - allegedly! Oh that had to hurt whoever! lol And then I wondered if there was any way I could wipe my "fingerprints" off the WWW, particularly BBC blogs for the last 5 years? No offence anyone. I was so aghast I mistuned to SKY briefly. It was Amy Winehouse. I sigh!
    Subject: oh yes she did - for worried familys
    Anagram: sorry - few - radio film - shoddy see - hi

  • Comment number 15.

    A key question - which seems to be ignored by analysts - is whether this deal will change the taste. Who want the plastic chocolate equivalent of Kraft cheese slices?

  • Comment number 16.

    I wondered when it would get around to banks again. Nice link, smooth & creamy even.

  • Comment number 17.

    Refreshingly different to see banks funded by the UK taxpayer destroying British jobs by lending money to businesses. Over the last 18 months those same banks while funded by the UK taxpayer have destroyed British jobs by withdrawing credit from businesses. Caledonian Comment

  • Comment number 18.

    The identity of the owners is largely irrelevant in my opinion - the issue is that a company that was being perfectly well has been aquired using debt (again). And suprise, suprise, the bankers have their cut...

    This is just another example of leveraged speculation - i.e. exactly what caused the whole mess that is now supposed to be over. And I can see nothing yet that will stop it happening again.

    On another point - I couldn't agree more with the poster yesterday who said Hershey's tastes of sick. I always thought this was just me - would an American please come on and explain its appeal?
    Mind you I'm addicted to dairylea triangles so I guess it takes all sorts...

  • Comment number 19.

    Let's not forget that this is a free market economy and the shareholders (the owners) of Cadbury's have the right to vote on whether or not this transaction goes through - not the goverment. The government wading in on M&A such as this is bad for our international reputation as a centre of business and could discourage foreign investment; even Clegg, Mandelson and Brown's comments alone make people fearful of some trigger-happy response or uninformed, politically motivated regulation in the City by the govt. In fact blocking the deal could even be unlawful.

    The LibDems, Mando and Gordon Brown and any other banker bashers should stop pandering to public sentiment. Yes, it is sad employees may lose their posts, but that is tragically all part of economic efficiency in a free market capitalist economy and can lead to a stronger company and better growth. If you don't like it, head to a one-party state where you might not be able to read this website, blog or even use google.

    Yes, perhaps it would be nice if the Americans did not get another UK company. Kraft would be unwise to ignore the sentiment of the public who buy its (and Cadbury's) products, but the fact remains it is a legitimate deal upon which the owner's of Cadbury's have a say.

    Furthermore, who's moaning about the legal fees? or the PRs fees? or the printers fees? or the media benefitting from the story? No one because there is no political reason to do so.

    Is it not welcome to see a recovery in deal activity and a group of banks lending money again?

  • Comment number 20.

    As everyone is now painfully aware, the banks always win. You win, they win, you lose, they win. In olden times they hunted people like this down as they were considered a danger to society. We are more civilized now as the criminal class is the new upper class. The collusion in price fixing would not be allowed in any other industry but other industries do not own the government. Change will not occur until there is change.


    Rather than stage an Olympics, a single arena could be built and people from around the world could bring bankers and toss them in the arena for public abuse. I think the tickets would bring a high price and full stadium. Economist could be tossed in first to warm up the crowd.
    Thumbs down.

  • Comment number 21.

    Oh well it will add to Euan Blair's bonus. Mind you by the size of him he appears to have been gorging on Cadburys since before the takeover.

  • Comment number 22.

    19. nicholas2140 :
    'The LibDems, Mando and Gordon Brown and any other banker bashers should stop pandering to public sentiment.'


    I suspect the banker bashing isn't going to stop until the british taxpayer gets back his £850 billion bailout monies plus interest. Plus fees. Plus charges.


    If you don't like it then head to a one party state or indeed switzerland. Wherever really. Doesn't matter.

    £850 billion in taxpayer support is a lot like thirty pieces of silver, and it buys a heck of a lot of bashing. At this rate it will probably go on for decades.

  • Comment number 23.

    Re #19

    Look where all the TVs, iPods, mobile phones and white goods are now made...in China. 'Fascism' is statism, it controls business (i.e regulates it) rather than let them run amok at the expense of PEOPLE. In the 1930's fascism was much admired across Europe and the USA! Think Glass-Steagall! However, for 'freedom' it was repealled in 1999 and similar legislation was here in 2000 too!

    Now, imagine some muddle-headed/anarchistically indoctrinated/conditioned people who just read/hear 'fascists control busnesses'.... (akin to prison officers control prisoners, teachers control pupils - are prison officers/teachers 'fascists' too?).

    More people are locked up in the US than were ever locked up in the USSR!
    The US and the UK have more people locked up per capita than any other nation...Now that's what I call freedom!

  • Comment number 24.

    I heard the Dear Leader say that he was 'determined' to ensure no job-losses or off-shoring of Cadbury UK production.

    How does 'determination' translate into action?
    ... or does it not really ...

  • Comment number 25.

    I see that the Cadbury family are now wringing their collective hands and saying how Kraft must look after the workers. Such hypocracy. We didn`t see them looking out for the workers when they took their money at the time of taking the company into public ownership.

  • Comment number 26.

    As ever, Mr. Peston is trying to make a story when there is none. As his own blog notes, it has been common practice for some time for defence fees to advisers to be higher in the event that a deal eventuates than in the case that it doesn't.
    The principal reason for this is that, whilst the board of a company under a hostile bid typically wishes to incentivise its advisers towards retaining independence, it is reluctant to pay a full fee to advisers if there is no deal because the company itself (and hence its own shareholders) has to pick up the tab. If a deal is completed however, it is the acquiring company that ultimately has to pay for the target's adviser fees. Boards prefer to spend other people's money.
    Mr. Peston states that "It was perfectly open to Cadbury, for example, to pay the banks a so-called success fee simply for securing an increased offer from Kraft, regardless of whether the takeover is actually completed". In reality, it is a near certainty that the fees to the defence advisers were on a "ratchet" such that the higher the ultimate price paid, the higher their fees. However, they will only receive this benefit if the deal completes and Cadbury shareholders get their money. This ensures that the advisers' interests are aligned with those of target shareholders.
    There are also a number of other reasons why defence fees are and, arguably should be, lower in the event the advisers' client remains independent but no need to go into those now.

  • Comment number 27.

    Nicholas2140
    '..all part of economic efficiency in a free market capitalist economy and can lead to a stronger company and better growth'

    ...or possibly all part of competitive game in which the rich are always the winners and the rest of us the losers?

    '...this is a free market economy and the shareholders (the owners) of Cadbury's have the right to vote on whether or not this transaction goes through'

    A free market economy? What's that then? Oh yes, one where the banks are propped up by the taxpayer and businesses make profits thanks to us setting up the monetary system, granting them limited liability and patent rights? And where we have to give away our autonomy for £5.80 an hour?

    '...If you don't like it, head to a one-party state...'

    You are confusing economic democracy with political oppression - I'm not quite sure how you did it, but there you are.

  • Comment number 28.

    22. warwick, I suspect the taxpayer will get their money back a lot quicker if the banks are allowed to get on with business and do some lending to stimulate the economy.

    And no, I'm not a banker.

  • Comment number 29.

    28.nicholas2140:

    Joy. I shall await the repayments with bated breath.

  • Comment number 30.

    26. fcbanker
    'This ensures that the advisers' interests are aligned with those of target shareholders.'

    On the basis of what Peston has said, only if it is in the shareholders' interests to sell up. Q.E.D. Your defence of bankers is no defence.

  • Comment number 31.

    With a contract like that put in front of me, I'd be looking for new bankers.

    None of this is difficult to sort out and none of it can possibly be described as ethical.

  • Comment number 32.

    30. diarmidwp 'On the basis of what Peston has said, only if it is in the shareholders' interests to sell up'

    Not sure I'm with you. If it isn't in their interests to sell-up, then the shareholders won't sell, there won't be a deal, Cadbury stays independent and the bankers get the lower independence fee.

    The board (and its advisers) only gets to advise shareholders on what it thinks they should do. In this case, the board has determined that the Kraft offer is worth more than Cadbury is alone and therefore advised the owners of the company (the shareholders) to sell.

    I'd like Cadbury to stay British too, but that's up to shareholders (albeit as advised by their board).

  • Comment number 33.

    So....

    Goldman Sachs, that "great vampire squid wrapped around the face of humanity", scores another bonus payment for its overpaid employees and partners, who, let's be clear about this, have taken no risk whatsoever personally, and who have conspired with the management of Cadbury's - as evidenced by this fact you have helpfully outlined, Robert - to line their own pockets.... totally legally!

    The core of the problem, though, is that the debt that is being used by Kraft to finance the majority of this acquisition (supplied amongst others by those stupid people at RBS for heavens sake!) is just TOO cheap!

    And why is RBS lending money to Kraft too cheaply (along with the rest of it's lending syndicate)?...... Because you and I as tax payers have underwritten all these banks, and our Central Banks have loosened monetary policy to such an amazing degree.

    If this hugely leveraged take-over is not a sure sign that the monetary stimulus in the UK/US should now be reversed, I don't know what is....

  • Comment number 34.

    Seems like there has been a 'finger of fudge' on Gordon's part.

  • Comment number 35.

    fcbanker

    'The board (and its advisers) only gets to advise shareholders on what it thinks they should do.'

    Indeed. And we know the likely results of that. But that is completely irrelevant to the question of perverse incentives, which is what is at issue here.

  • Comment number 36.

    Flog Cadbury to the yanks
    Lend them RBS/taxpayer loot to do it
    Ban chocolate from schools on obesity grounds
    Invent a NHS fat tax on chocolate
    Thanks yanks, we got your money, happy zits

  • Comment number 37.

    Robert Peston has reported the fact that the banks will make a lot of money if/when the sale of Cadbury goes through. Surely this is the point. I want to know how much the Board of Directors of Cadbury will be paid in severance/renewed contracts/pension rights , but the BBC has not published my request. I wonder why?

  • Comment number 38.

    Robert
    RE: Craft Takeover of Cadbury:
    The politicians are now doing the absolute minimum regarding the acquisition of Cadbury's and protection of British business assets and by doing nothing in terms of any kind of protectionism because they are using the argument that British businesses are thereby enabled to make overseas acquisitions of foreign business assets as a reciprocated goodwill protocol.
    I have tried to do some research and web searches etc and I have not been able to find any overseas business acquisitions by British companies, of any foreign business interests which can be regarded as truly 'strategic global business assets' in terms of having a global product brand, technology, reach, share etc.
    I hope that someone can post and now prove me wrong as it would be disappointing if the UK business community has not been able to purchase any major foreign business asset in recent years as comparable to e.g. Cadbury's brand.
    Does anyone have any better information on this please?
    It seems to me that our politicians and business community are misrepresenting the real position on this - the UK is far more generous on allowing any and all businesses for sale and the countries that have true strategic business assets only allow British companies to purchase non-transferable business interests and/or non strategic interests.

    Surely, this all indicates thatthere is strong case for the UK applying principled protectionism to our UK strategic businesses.

    The talk amongst politicians is of creating new UK green and other new businesses going forward - Great - but what is the point of doing this if these are going to be sold off overseas in, e.g. say 7-10 years and continue the decline of British industry?

  • Comment number 39.

    20. At 3:49pm on 20 Jan 2010, ghostofsichuan wrote:

    As everyone is now painfully aware, the banks always win. You win, they win, you lose, they win. In olden times they hunted people like this down as they were considered a danger to society. We are more civilized now as the criminal class is the new upper class. The collusion in price fixing would not be allowed in any other industry but other industries do not own the government. Change will not occur until there is change.


    Rather than stage an Olympics, a single arena could be built and people from around the world could bring bankers and toss them in the arena for public abuse. I think the tickets would bring a high price and full stadium. Economist could be tossed in first to warm up the crowd.
    Thumbs down.

    --------------

    Brilliant post! You must be a writer!

  • Comment number 40.

    Why is everybody overlooking the fact that over the years Cadbury has itself been very aggressive in its M& A activities? Remember the outcry over Green & Blacks ? (And was that deal done because the philanthropic Cadbury had been left behind on FairTrade issues?) How many of the brands in its portfolio were national treasures elsewhere? Have people noted that Cadbury already employ 8,000 people in the USA and 11,000 in Europe - substantially more than in the UK? People are assuming that Kraft will slash UK jobs but this is no more than speculation. Indeed the US jobs could be more at risk.

  • Comment number 41.

    It very much sounds that once Cadbury was 'in play' the board began with a defeatist attitude that the result was a forgone conclusion and the only thing they focussed on was getting the best price for it, hence the wording and arrangements. Hiring banks whos primary business locations were the countries where the suitor happened to have their main interests (i.e. US and Switzerland) only makes sense in that light.

  • Comment number 42.

    Normally i wouldn't really be concerned about the winners unless it is at the expense of the losers.

    It certainly now seems that the use of cadbury's traditions and the played out concern for the loyal workforce were milked for a few dollars more rather than to protect these with any sincerity

  • Comment number 43.

    38. nautonier

    No recent examples I'm afraid, but it's been a long time since I was involved in business. From memory I can cite BP/Amoco, BP/Arco, Hanson (prior to the Germans buying them) and of course GlaxoSmithKline. I'm sure there are must be more recent examples.

  • Comment number 44.

    I am bored writing about how useless bankers (sic) are & how they simply move stuff around not create anything of value. At least footballers entertain (well some, sometimes), bankers simply bore us & then abuse us. Collectively they are not only 'socially useless' but bankrupt or would be. They are never going to face the consequences of their ineptitude or be held to account it would appear. Next time and their will be a next time; just take out the bondholders and the lame shareholders and restructure them: Re-introduce a separation between 'investment' (sorry I nearly choked) banking and dubious proprietary trading (gambling) and increase capital requirements. Under this structure they will only lose 'clients' money not depositors and they will not have our cash to leverage their bets into the stratosphere. Then hopefully they will leave because they will not have a free ride (Greenspan put or Bernanke billions) and consequently will not make obscene profits because they will not have the reassurance (dead cert) or balance sheet to play the game.

    Does anyone know why the bondholders were not taken out? I have posed this question to many people (analysts, economists-one nobel) and none have provided a satisfactory answer apart from simply fear. Bondholders do lend at risk don't they? It would appear not. Now I am really bored.

  • Comment number 45.

    40

    "People are assuming that Kraft will slash UK jobs but this is no more than speculation."

    Absolutely right, certainly HQ jobs will go but buried in the wailing and gnashing of teeth reports was one from BBC in the south west where workers at the Keynsham plant (former Frys which Cadbury took over) were hopeful that Kraft would retain it as opposed to Cadbury which was in the process of shutting it and offshoring the production. Seemed to be based on Kraft stating they would look at options to retain this plant in its offer document.
    So could be beneficial no only for the workers but their suppliers also.



  • Comment number 46.

    43. At 6:05pm on 20 Jan 2010, Uphios wrote:

    38. nautonier

    No recent examples I'm afraid, but it's been a long time since I was involved in business. From memory I can cite BP/Amoco, BP/Arco, Hanson (prior to the Germans buying them) and of course GlaxoSmithKline. I'm sure there are must be more recent examples.

    >>>>>>>>>>>>>>>>>>>

    That's what I thought - I can't think of any recent globally strategic acquisitions by British companies after seeing a shedload of politicians on the box grovelling and wincing (over the last 48 hours) as to why Britain should expose itself to any and all acquisitions of UK strategic business.

    The plain fact is that our politicians and city gurus don't know the facts as our government does not have an a strategic business assets register and a board of experienced business people to consider this kind of issue.

    We're given misnformation over and over again and the fact is that if British companies are allowed to purchase business assets overseas, other than very rarely are British businesses 'allowed', anywhere, to buy anything like anything 'globally strategic.'

    I do hope our UK politicians are questioned on their knowledge of overseas business issues because to me it sounds like they know nothing and their policies, preparedness and protection policies for dealing with these damaging takeovers are ... non-existent.

    This is 'one way traffic' and uk plc is becoming nearly fully 'non-strategic' in global terms - I think that this matters a great deal.

  • Comment number 47.

    As far as I understand an averarage M&A transaction results in a success fee of around 3% to the buyers advisors. Thus the Cadbury/Kraft transaction will result in costs of around 3% of £11B paid to Kraft's advisors and something else, in an unbelievable success fee, being paid for the stalwart maximisers of Cadbury's share price.

    The supposed annual cost savings for the deal are £411m ($675m). Since the cost savings won't be available to Kraft until 2011 and the transaction involves a downgrading of the debt of both companies, this transaction is simply a transfer of money between the Cadbury's HQ, through corporate HQ cost reduction, and about 50-60 M&A bankers in London and New York.

    Nobody knows whether they will be able to drive through cost savings in the future and the history of such mega mergers is clearly poor.

    Fundamentally this transaction stinks of M&A vested interests at the cost of UK HQ jobs, and the resultant spin-off UK ecomomic benefits.

    The fund managers, who now own Kraft shares instead of Cadbury shares, appear to be only interested in short term gains to make their yearly performance look good. It is another case of the money managers being managing other peoples money for their own interests rather than their clients.

  • Comment number 48.

    totally agree that RBS making huge fees out of this is an outrage - the only people who argue the 'free market' perspective etc are those who profit from such deals - the other issue is that Brown and Mandelson make pathetic noises about protecting UK interests, and the best that Mandelson could say yesterday in public after the Cadbury decision had been announced yesterday was that 'shareholders have responsibilities' (when these decisions come up) as if that will be even close to their minds?
    Mind blowing stuff and frankly either completely naïve or he is treating his audiance as if they are themselves.
    Why is that other European Governments, especially Europe’s economic powerhouse, act totally differently than we do in the UK in these circumstances? Because they see the longer-term repercussions of not doing so and they have more backbone than UK politicians.
    Once again, the only ones who are laughing are the banks, and tax payers and UK workers are left with the remnants of what will be decided from thousands of miles away.

  • Comment number 49.

    46. At 6:28pm on 20 Jan 2010, nautonier

    Well done and good luck in your hunt for evidence-based economics.
    It's the only way to grasp what is really going on and what we need to understand.

  • Comment number 50.

    Whilst we're back on banks I notice the MPC raise the elephant in the room again. You know, UK institutions are forecast to need £33 billions extra capital and need to refinance their own funding maturities over the next five year- over £1 trillion. Any news on this anyone or is there another computer button at Threadneedle Street ready to be pushed.

  • Comment number 51.

    49. At 6:42pm on 20 Jan 2010, copperDolomite wrote:

    46. At 6:28pm on 20 Jan 2010, nautonier

    Well done and good luck in your hunt for evidence-based economics.
    It's the only way to grasp what is really going on and what we need to understand.

    >>>>>>>>>>>>>>>>>>>>>>>>

    Wish I'd kept quiet now - its become quite a challenging search!

  • Comment number 52.

    If banks are always the winners, why are their share prices not going up? The City still has issues with the Banks generally.

  • Comment number 53.

    #19 nicholas2140

    Strongly suggest you don't ever make any of your opinions known out loud.

  • Comment number 54.

    @ 46 nautonier
    "I do hope our UK politicians are questioned on their knowledge of overseas business issues because to me it sounds like they know nothing"

    Like the three wise monkeys, it's their policy to see no evil, etc.

    On your research about the acquisitions of British companies abroad, what about Tesco? They are expanding like a Martian invasion everywhere. They are in Ireland, Poland, Japan, Thailand, Turkey. They are currently number 2 or 3 in profits behind Walmart and Carrefour.

    One day no doubt we'll be able to vote for the next government from a superstore, as we buy a bar of globally standardised chocolate.

  • Comment number 55.

    You mean that every time I have my drinking chocolate, I'm funding some slimey banker to polish his bank in a leather chair?

    Hm... I'll just have the warm milk in future, screw the bankers...

  • Comment number 56.

    What is the definition of a UK business?
    Is it rational to assume that any business not privately owned can really be British owned?

  • Comment number 57.

    Wow!...has anyone else noticed the upsurge in the pro-banking lobby on this blogsite?...the leeches must be getting a tad worried!

  • Comment number 58.

    46

    You should also look at Cobham (thats a real goody when you find what they managed to buy in the US),BAE, BT, BAT, BG, Autonomy, Diageo, Barclays, Vodafone, Sage, Pearson, GSK, Smith and Nephew, Unilever, Reckitt-Benkhuizer, Royal Dutch Shell (must be something in the UK/Dutch mergers that works - excepting Corus).

    The success of these British companies in most cases is that they are so successful you don;t even think of them as British anymore (and neither do they in most case to be fair).


  • Comment number 59.

    #53. Wee-Scamp wrote:

    "#19 nicholas2140

    Strongly suggest you don't ever make any of your opinions known out loud."

    Why on earth not? His views may not please the bullying doom-sayers who plague this forum, shouting down everyone who disagrees with them, but in the real world a wide range of opinion is permitted and respected.

  • Comment number 60.

    #48. Kevin Lonergan wrote:

    "totally agree that RBS making huge fees out of this is an outrage - the only people who argue the 'free market' perspective etc are those who profit from such deals..."

    While I am a little uneasy with the takeover of Cadbury, it has to be recognised that there was probably no shortage of banks offering the necessary finance to Kraft to facilitate the deal. So isn't it better that the fees are earned by a bank owned by the taxpayer than a bank that is not?

  • Comment number 61.

    If Cadbury remained British owned and they moved production offhsore the profits came back here.

    If Kraft moves Cadbury's production out of the UK, what does the UK get? Will those making a profit from the sale want to guarantee the unemplyment benefit of Cadbury staff?

    Will we ever learn the lessons of history?

  • Comment number 62.

    On BBC News 24, they'e just had a little item about Warren Buffet. As a shareholder in Kraft he thinks the deal to buy Cadbury's is no good and if he had the chance to vote on it (which he won't), he'd vote against it.
    The item finished by noting that since Buffet made his views known, Kraft shares have dropped by 2%!

    I wonder why?

  • Comment number 63.

    54. At 7:28pm on 20 Jan 2010, starry-tigger wrote:

    @ 46 nautonier
    "I do hope our UK politicians are questioned on their knowledge of overseas business issues because to me it sounds like they know nothing"

    Like the three wise monkeys, it's their policy to see no evil, etc.

    On your research about the acquisitions of British companies abroad, what about Tesco? They are expanding like a Martian invasion everywhere. They are in Ireland, Poland, Japan, Thailand, Turkey. They are currently number 2 or 3 in profits behind Walmart and Carrefour.

    One day no doubt we'll be able to vote for the next government from a superstore, as we buy a bar of globally standardised chocolate.

    >>>>>>>>>>>>>>>>>>>>>>

    Tesco are a giant UK success story aren't they from agovernment point of view as keeping the masses fed and full of alchohol), trying to be objective here? - tolerated/admired everywhere/overseas because they import everything/themselves in terms of brand and avoid major takeovers and only add to what's there and many countries are behind in supermarket retailing.

    But they damage local shops in the UK and out some local shops out of business according to many but how long is it before they themselves are taken over by a 'foreign predator'?

  • Comment number 64.

    You know a little while back the financial crisis was shocking news. The politicians around the world were holding summits, flying hither and thither and there was talk of new world orders, new global financial restrictions, replacing the Bretton Woods relics and so on.

    Today however the democratic governments are bogged down in pre-election or midterm election nonsense, the Russians are concentrating on energy and industrial reform, the Chinese are plodding along on their dollar divestment strategy, the Japs are hoping that an Asean boom saves them from deflation and wonder how to adjust to a new dynasty of DOJ, the Aussies are hoping carry trade carries on a bit longer, the Africans are starving, and Central and Eastern Europe are drinking beer.

    All the while everything gets steadily worse.

    We are screwed, and that's the long and the short of it.

    It is going to take a small club of motivated people to get together now and start planning for the future, because most others are incapable or unwilling.

  • Comment number 65.

    The people out there saying that it was the shareholders perogative to sell or not are quite right, but the 25% of the shares owned by Hedge Funds (which tend to be run by a small group of financials mercenaries) were hardly going to say no if there was a decent profit to be made.
    The unscrupulous characters who run Hedge Funds care little about UK employees (or in fact employess of any nationality) as long as they make a decent return.

  • Comment number 66.

    And RBS are funding this venture, truly perverse.

    Peston where is the update on this?

  • Comment number 67.

    Have no fear - the government plans a more strategic approach to British business going forward (presumably because the last 13 years have been non-strategic?)as set out by Peter Mandelson -
    see
    http://www.bis.gov.uk/publications

    Going for growth: our future prosperity
    URN: 09/1473

    Priority Actions Detail
    Opening up global trade and enhancing EU competitiveness

    2010: Support international action to prevent protectionism through G8 and G20 processes,the Global Trade Alert and the World Trade Organisation’s protectionism monitoring work.

    Please refer to page 36

    By 2015: Implement measures to reduce burdens on international traders published in ‘Simplifying Trade Across UK Borders – A Plan of Action’.

    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Great stuff by 2015 we should be seeing - 'Some 'Simplification of Trade Across UK borders - A plan of Action'

    Well that's reassuring and we'll only have to wait until 2015 - I didn't know we still had any borders!

    Worth a look if you could do with a real good laugh! Ha! Ha! Ha!

    As for the British companies buying business assets overseas - there have been a surprising lot of relatively smaller and medium transactions but none that could perhaps be regarded as globally strategically significant for quite a few years except stuff like RBS/ ABN amro was arguably a global deal of strategic business but non-manufacturing.

    Perhaps Mandelson can outline how the UK is to make up for the overseas sale of 50 major global strategic UK businesses, within his new strategy that is referred to in 'Going for growth: our future prosperity' - Or is that just complete bunkum as well?

    I take the view that the UK is in danger of being asset stripped to the point where the entire UK manufacturing sector is virtually 'non- strategic' in terms of global business - If so does that also now make the UK to once more be a developing country having turned a 200 + year manufacturing cycle - Does anyone disagree?

  • Comment number 68.

    36 Sid
    So when we follow your plan and Kraft default on loan we pick up tab as owning 84% of RBS, did not really get their money then did we.

  • Comment number 69.

    The small group of people who run the large international banks are the real power in our society, not our government. Unelected, they make decisions upon which economies stand or fall and individual people manage to eak out a living or do not. Non-executive directors, shareholders or regulators haven't demonstrated they can come anywhere close to acting as an effective check and balance to that power. Governments are powerless, held to ransom by the damage that would be done if the organisations these people run were to fail and mesmerised by arguments about the benefits of free markets. That power truly frightens me. It is not wielded for the good of society.

    This Cadbury episode seems to me just another example of that chilling lesson. In no other circumstances I can think of would an industry be left to carry on as normal after inflincting even a fraction of the damage to society that banking has inflicted. What has changed since we came so close to the precipice?

  • Comment number 70.

    At 8:44pm on 20 Jan 2010, rbs_temp wrote:
    "While I am a little uneasy with the takeover of Cadbury, it has to be recognised that there was probably no shortage of banks offering the necessary finance to Kraft to facilitate the deal. So isn't it better that the fees are earned by a bank owned by the taxpayer than a bank that is not?"
    I fear you are missing the point - RBS is only operating through the support of UK taxpayer's cash and within those operations is helping to put in jeopardy British jobs in (what was) a fine British firm – many other countries simply would never allow this for reasons that are obvious to all but the bankers and the individuals who stand to make most from these deals.

  • Comment number 71.

    69. At 10:49pm on 20 Jan 2010, Wageslave256

    Robert did publish a Book with the title "Who Runs Britain?: and Who's to Blame for the Economic Mess We're

    Looks like they are still running the country....

  • Comment number 72.

    I can see the logic after reading the articles here. Variety is the spice of life and this deal seems like the outcome of a debate across the whole political spectrum. The Americans are sending troops out all over the place which benefits us it's a way of squaring the bargains. They do something for us so we do something for them in return. I don't begrudge it at all. We have microsoft we have yahoo we have we have all the goodies that they have shared with us and 'payback time' doesn't always have to mean violence is involved.

    For years the only chocolate we had has been cadburys you have a lot of the same thing all the time and you get bored of it. You want to try something different. But recently more variety has appeared in the shops here so while there is a trade off economically overall the deal is you get more enjoyment from trying different things and everyone has an appetite for that.

  • Comment number 73.

    "19. At 3:48pm on 20 Jan 2010, nicholas2140 wrote:
    Let's not forget that this is a free market economy...."

    How can it be a free market when HMG/BofE is a monopoly that controls the money supply (ie. one side of every transaction)?

  • Comment number 74.

    #70. Kevin Lonergan wrote:

    "I fear you are missing the point - RBS is only operating through the support of UK taxpayer's cash and within those operations is helping to put in jeopardy British jobs in (what was) a fine British firm – many other countries simply would never allow this for reasons that are obvious to all but the bankers and the individuals who stand to make most from these deals."

    I'm not missing the point at all.

    If any bank is going to make money from the takeover of Cadbury then it may as well be one that we own.

    And if any jobs are to be lost then it will for the most part only be a continuation of the process that Cadbury itself started by shifting so much production to lower-cost countries.

    You could argue that it is those who are up in arms about an iconic British brand being owned by an American multi-national corporation who are missing the point. American icons such as Greyhound and Ben & Jerry's are owned by British companies. Globalisation works both ways.

  • Comment number 75.

    Great article. I am sure you will find on page 36 of the Cadbury/Bank's engagement contract the cock-eyed renumeration package fully detailed.

  • Comment number 76.

    I hear, "Keeping Cadbury British would be pandering to sentiment not following cold economic logic. Not only that, it wouldn't be playing fair in the international market place."

    The French have done quite well by being very sentimental about their car, aircraft manufacturers and several other industries. I notice the logical Swiss are equally sentimental about their chocolate manufacturers, pharmaceutical companies and their banks. In the long term, sentiment seems to carry the economic logic. Does 'cold economic logic' just mean 'fast buck' and 'sentiment' equate to 'in for the long run'?

    And as for fairness, life is NOT fair. In a world where everyone is looking to their own interest, it's too easy to cut your own throat.

  • Comment number 77.

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7039400/UK-must-stop-complaining-about-foreign-buy-outs.html

    OK everyone loosen up - a Telegraph columnist thinks that we should stop complaining!

    Personally, I'm waiting to hear of the next statement from Nick Clegg as he seems to be the only politician with anything of substance to say on the matter, it seems

  • Comment number 78.

    #70. Kevin Lonergan wrote:

    "I fear you are missing the point - RBS is only operating through the support of UK taxpayer's cash and within those operations is helping to put in jeopardy British jobs in (what was) a fine British firm – many other countries simply would never allow this for reasons that are obvious to all but the bankers and the individuals who stand to make most from these deals."

    >>>>>>>>>>>>>>>>>>>>>>>

    Brilliant post - I think you hit the nail on the head there.

    Perhaps the government could find the competence to employ a competent management consultancy to manage RBS for them and ensure that tax payers' monies are only loaned by priority from RBS to British domestic borrowers and British domestic businesses and lower priority for making overseas business acquisitions - except with some priority to acquiring strategic business assets overseas.

    This might mean that the City will not keep milking the British taxpayer with excess fees and bonuses and prevent general banking courruption and sleaze?

    Its not rocket science - buzz or stagnate!

  • Comment number 79.

    Why are we trying to create an educated society if the profits that will arise from it will go to foreign investors? There are few UK owned companies who can capitalise on UK inventions and skills. We have killed manufacturing and lost control of our infrastructure and the banks will foster this attitude of creating transactions for the sake of their fees and bonuses.

  • Comment number 80.

    This is also another example of what the FT's John Kay has brilliantly identified as the distinction between "wealth appropriation" and "wealth creation" and the concomitant systemic problem of rampant "Agency Capture". The biggest winners are of course the advisers to the deal and the incumbent management. When the Chairman, Roger Carr, has 500,000 Cadbury shares & the CEO, Todd Stitzer, stands to make a seven figure profit on his shares and options (see FT Jan 20th), it is not credible to expect them to judge what is in the best long term interests of all Cadbury stakeholders, including employees & the communities around Bourneville. Many long term Cadbury shareholders, as opposed to the short term hedge fund players, remain unconvinced of the business benefit of the deal and what is equally striking is that Kraft's biggest shareholder, Warren Buffet, also thinks it is a "bad deal". This strongly suggests significant doubts exist either about the strategic rationale or the financial rationale. In all likelihood the deal has been pushed through in the interests of the "agency" interests of senior executives on both sides, the advisers who clean up whenever corporate activity takes place, and the in and out speculative shareholder base. Bully for them but almost certainly bad news for all those with a long term commitment to Cadbury

  • Comment number 81.

    Where's my comment?

  • Comment number 82.

    The UK is whored by the city pimps while the 'government' voyeurs in dirty macs look on.

  • Comment number 83.

    77. At 09:34am on 21 Jan 2010, nautonier wrote:

    OK everyone loosen up - a Telegraph columnist thinks that we should stop complaining!

    The link there to Jeff Randall shows he's got it ALL (UK in TFM) covered.

    Let Brown be forever known as Gordon Boomandbust


  • Comment number 84.

    83. At 1:02pm on 21 Jan 2010, kef wrote:

    77. At 09:34am on 21 Jan 2010, nautonier wrote:

    OK everyone loosen up - a Telegraph columnist thinks that we should stop complaining!

    The link there to Jeff Randall shows he's got it ALL (UK in TFM) covered.

    Let Brown be forever known as Gordon Boomandbust

    >>>>>>>>>>>>>>>>>>>>>>>>>>

    Jeff Randall shows he's got it ALL (UK in TFM) covered?
    >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

    Really - have you seen some of the posts on his article on the Telegrpah website?

    >>>>>>>>>>>>>>>>>>>>>>>>>>>

    Let Brown be forever known as Gordon Boomandbust

    >>>>>>>>>>

    It sounds fair enough to me!

  • Comment number 85.

    When are the politicians and bankers in this God-forsaken country going to wake up and start to protect UK PLC's interests? Whilst it might be a good idea for foreign companies to take over ailing hopeless cases in the hope that they can turn them round, it certainly is not in the interests of UK PLC and anyone in the UK for good world-class companies to be taken over. It is time for the British people to declare war on Kraft and any banks or major shareholders on the public register that are supporting this rape of British assets. Any bank (including RBS) that is supporting it should be subject to a mass boycott, with the objective of either taking it down or removing all the board of that organisation. Kraft should be threatened with a UK-wide total boycott of all of its other products, and any financial institutions who vote to support or abstain in the takeover vote should be ostrasized in the same way as RBS. As the French have said before: Non!

  • Comment number 86.

    hey robert,
    dont forget the board! the total payout will run into millions.

    and the pension funds who own the majority of the shares, managers and senior executives will do well to. they might even remember the pension policyholders themselves?

    as for the wider question of if the uk economy will benefit from this take over, ask terrys of york.





  • Comment number 87.

    Since Cadbury's employees are taxpayers, and RBS is taxpayer-owned, they are effectively lending their own money to put themselves out of a job. How mad is that?

    It's great that the bankers are so well rewarded for facilitating such a valuable transaction.

  • Comment number 88.

    http://petitions.number10.gov.uk/CadburyBritish/

    For those who wish to sign a petition trying to keep Cadburys under British ownership - here's the link.

  • Comment number 89.

    freemarketanarchy

    Very interesting.

    You might like to try here too: http://forum.darwinawards.com/index.php?s=&showtopic=9328&view=findpost&p=491569

 

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