Kraft Foods’ takeover of Cadbury was only a quarter the size of last year’s biggest bids — BHP Billiton’s for Rio Tinto, for example — but the offer for the confectioner has assumed disproportionate importance and could permanently tilt the playing field for future British acquisitions, by protecting companies at the expense of investors’ profits.
Kraft Foods’ takeover of Cadbury was only a quarter the size of last year’s biggest bids — BHP Billiton’s for Rio Tinto, for example — but the offer for the confectioner has assumed disproportionate importance and could permanently tilt the playing field for future British acquisitions, by protecting companies at the expense of investors’ profits. The Takeover Panel is considering new ‘Cadbury Rules’ that would allow companies to keep their independence even when most shareholders want to accept a bid, and that could leave directors in control who are opposed by a majority of investors.
Cadbury was part of all our childhoods. But there have been previous bids that triggered emotional responses — BTR’s offer for Pilkington provoked protests on the streets of St Helens, Granada was branded an upstart caterer for buying LWT — without leading to changes in the Takeover Code. Yet a myth developed around Cadbury that made it a cause célèbre which could result in the most radical rewrite of the takeover rule book since the City panel started refereeing bids in 1968.
The fantasy that Cadbury was a quint-essentially British, family-run chocolate maker with Quaker values was promoted by its unions, repeated by the media and left uncorrected by its directors. The campaign to save it from American raiders thus grew under its own momentum. In fact, the family largely sold out when the company floated in 1962 and the last Cadbury retired a decade ago: the business makes more profit from chewing gum than chocolate and employs more people (and generates more sales) in America than in Britain.
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