Kraft Foods Focus To Shift To Integration, Repairing Damage
February 02 2010 - 10:56AM
Dow Jones News
With the completion of Kraft Foods Inc's (KFT) GBP11.9 billion
purchase of Cadbury PLC (CBY) imminent, the U.S. food giant's focus
will now shift to integrating the U.K. confectioner and repairing
the damage caused by four months of acrimonious battle.
The deadline for Cadbury shareholders to accept Kraft's 850
pence a share offer passed at 1300 GMT Tuesday. With a
recommendation from Cadbury's board already secured, Kraft is
expected to have easily won the 50% acceptance level it needs to
succeed and will likely confirm its success later Tuesday.
The move will bring to a close both a five-month bid process and
186 years of independence for the maker of Dairy Milk and Trident
gum.
Kraft's chief executive Irene Rosenfeld is in the country to
"pick up the keys" Tuesday and her first task will be to meet the
U.K. government's business minister Peter Mandelson to ease his
concerns over U.K. jobs.
The takeover has attracted much criticism in the U.K., not least
from Mandelson himself, who warned Kraft late last year against
trying to make a "quick buck" on Cadbury and said the buyout would
have to respect the company's "work force and the heritage and
quality."
Trade union Unite has campaigned against the deal for the past
two months, warning that Kraft's high debt levels leave thousands
of U.K. jobs at risk. Cadbury employs 5,600 staff in the U.K. and
another 40,000 around the world.
The campaign continued in London Tuesday, as workers urged the
U.K. government to ensure Kraft's pledges to Cadbury's workforce
are more than just "warm words."
Kraft CEO Rosenfeld has already promised to keep the Somerdale
factory near Bristol open despite Cadbury's previous management
earmarking it for closure. She has also said Kraft will be a "net
importer" of jobs to the U.K.
"We understand the strength of feeling for this company across
the U.K.," Mandelson's Department Of Business, Innovation and
Skills said, "however the decision on the Kraft bid is a matter for
the Cadbury shareholders."
There will undoubtedly be redundancies however, most likely at
Cadbury's new head office on the outskirts of London.
Kraft is targeting GBP675 million of synergies from the deal and
combining regional offices is an obvious place to start.
Reports suggest Rosenfeld will be meeting Cadbury staff in
London later this week. When she does, she may have a tough time
persuading them of the benefits of Kraft's buyout.
Cadbury workers will have a dim view of their new employers if
they've been listening to Cadbury's Chairman Roger Carr and Chief
Executive Todd Stitzer in recent months.
Until deciding to recommend Kraft's offer on Jan. 19, Carr had
repeatedly criticized Kraft's "low-growth conglomerate" model and
underperforming management to all who would listen. Stitzer chipped
in with criticism of his own, describing the U.S. maker of
processed cheese as a "lumbering corporate monolith."
While none of this was enough to stop them recommending a bid,
it may well have had an effect on Cadbury employees worldwide.
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278;
michael.carolan@dowjones.com
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