Kraft criticised over Cadbury factory pledge
- 26 May 2010
- From the section Business
US food giant Kraft has come under fresh criticism for pledges it made during its takeover of Cadbury.
The Takeover Panel, which polices bids in the UK, has censured Kraft over its statement during the bid that it would keep open Cadbury's Somerdale factory at Keynsham.
After it had bought Cadbury, Kraft then announced it was shutting the Keynsham plant after all.
The Takeover Panel said Kraft and its adviser failed in their duties.
These include the provision of robust, accurate information to investors during the bid.
When it announced it was considering a bid for Cadbury in September last year, Kraft said the UK would be "a net beneficiary" of jobs as a result of any takeover and made specific assurances about the Somerset plant.
"We believe we would be in a position to continue to operate the Somerdale facility, which is currently planned to be closed, and to invest in Bournville, thereby preserving UK manufacturing jobs."
The Panel said that it accepted Kraft made the statement in good faith, but that it was not in a position to make such a pledge and should have not have made such firm statements without being absolutely certain of its facts.
Kraft's spokesman, Marc Firestone, said the company would not appeal the decision - and underlined that it had not made a firm promise to keep Keynsham open.
In a statement he said: "We regret that, once we had full information, it was not feasible to keep Somerdale open, as we'd originally believed possible. Even though we never made a promise or a commitment to keep the facility open, we recognize that our "statement of belief" created uncertainty among Somerdale employees."
The company added that it was pleased that the Takeover Panel concluded that it acted in good faith, and said it would not appeal the decision.
The Panel's view of the handling of the matter has had a knock-on effect on its own board.
Kraft's advisers throughout the bid was the investment bank, Lazard, where a senior banker at Lazard at the time was Peter Kiernan.
He was due to become the next director general of the Panel.
A statement released along with the Kraft criticism said simply: "Peter Kiernan has informed the Takeover Panel that he has decided to withdraw his candidacy for the role of Director General following the resolution of the Panel's investigation into certain statements made about Cadbury plc's Somerdale facility during the offer by Kraft Foods Inc for Cadbury plc.
"Philip Remnant will continue as Director General, in addition to his other commitments, until further notice."
The closure of the Somerdale factory will result in the loss of 400 jobs, with production moving to Poland.
Kraft has faced a raft of criticism over its handling of the takeover.
In April, a panel of MPs said Kraft had acted both "irresponsibly and unwisely".