Kraft backs out of promise

Sommerdale factory to close

After Kraft pledged to keep the doomed Cadbury factory at Somerdale near Bristol open, it's gone back on its pledge and announced it will close.

The plant, which employs 400 staff, had been earmarked for closure in 2011 by Cadbury, with most of the work moving to a new production site in Poland. However, Kraft said in its original offer document it believed it would be "in a position to continue to operate the Somerdale facility and invest in Bournville [...] preserving UK manufacturing jobs."

Today though, according to British paper The Telegraph, Kraft argued that redundancy agreements with staff and plans to move production outside of the UK are too far advanced. "In our recent talks with Cadbury senior management, it became clear that it is unrealistic to reverse the closure programme, despite our original intent to do so," Irene Rosenfeld, Kraft chief executive, said on Tuesday.

Cadbury has already invested more than GBP£100 million in building new production facilities in Poland and the majority of the lines are about to be transferred by the middle of this year.Cadbury announced in 2007 that it planned to close Somerdale and transfer the work done there to Poland with the loss of about 500 jobs.

About 100 workers have already been made redundant but Kraft's ownership had offered hope that the remaining jobs could be saved. The Unite union said: "This sends the worst possible message to the 6000 other Cadbury workers in the UK and Ireland. It tells them that Kraft cares little for their workers."

It has also emerged that Cadbury chief executive Todd Stitzer, who has announced his intention to stand down, made a GBP£4.6 million profit on the sale of shares awarded to him due to the sale of the company to Kraft.

The US businessman acquired 1.36 million shares at 503p as part of Cadbury's executive share scheme and sold them on the same day for 841p.

Roger Carr

Former Cadbury chairman Roger Carr has said that UK takeover regulators should consider raising the acceptance threshold and excluding short-term shareholders from voting. During the 19 weeks thatCabdury was the target of a bid from Kraft, a quarter of Cadbury's shares were sold by long-term holders, and the eight biggest buyers were hedge funds or short-term funds.

"In the final analysis of the deal, it was the shift in the shareholder register that lost the battle for Cadbury," said Mr. Carr, who is still the chairman of Centrica.

In a speech to the Saïd Business School, part of the University of Oxford, Mr. Carr argued that City takeover rules should be changed to require a minimum of 60 percent of shareholders to approve a takeover, rather than the present 50.1 percent. This, he said, would reduce the influence of hedge funds that had bought in merely to force a deal through.

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Cadbury board recommends sale to Kraft |Cadbury vs Kraft |Kraft deal with Cadbury finalised |Cadbury sale agreed

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