Takeover Panel criticizes Kraft Foods
LONDON — The U.K. Panel on Takeovers and Mergers on May 26 criticized Kraft Foods Inc., saying the Northfield, Ill.-based company failed to meet the Panel’s standards when it backtracked on its plans to keep Cadbury P.L.C.’s Somerdale facility in southwest England open following its acquisition of Cadbury.
While the Panel acknowledged that Kraft “held an honest and genuine belief” that it could keep the Somerdale facility open at the time of its public announcement, it said Kraft should not have made the statements it did when it did not know the full details of Cadbury’s pending closing of the plant. Kraft only became aware of the significantly advanced stage of the Somerdale closing after its executives gained access to Cadbury’s management at the end of January.
“Without this information, Kraft’s belief, no matter how well intentioned, that it could continue to operate the Somerdale facility on a commercial basis was, in the opinion of the executive, not a belief which Kraft had a reasonable basis for holding,” the Panel said. “Kraft had an opportunity to take mitigating action once it gained access to representatives of the Cadbury management team, which first occurred on the night of Jan. 18-19. Kraft was told on that night that the phased closure of Somerdale was well advanced, that money had been committed, and that both equipment and people had been, or were in the process of being, moved out. However, Kraft did not take this opportunity to seek further information from Cadbury in order to establish whether the closure was so far advanced that it was unrealistic to reverse it.”
Kraft said it accepted the Panel’s decision, although it noted it had acted in good faith.