Blog: Dean BestIs Cadbury's defence looking Flakey?

Dean Best | 13 November 2009

UK blog number three:

I had a number of thoughts for the blog pages today - and one of which (don't yawn at the back) was on the ongoing takeover saga between Kraft and Cadbury.

Here in the UK, there is much nervousness about those allegedly big bad Yanks coming over and stealing - as some would have you believe - one of the country's business jewels.

What most of the nervy seem to miss is that there is already a significant (and apparently growing) US interest on the Cadbury share register.

Since Cadbury rejected Kraft's hostile approach on Monday, US hedge funds have snapped up shares in the Dairy Milk maker. According to the FT, up to 14% of the business is now owned by the hedge funds - or 'arbs' as they are otherwise known.

Hedge funds are renowned for their short-termism and, as the FT puts it, their presence as Cadbury shareholders could make it harder for the UK firm to "control its destiny". A higher bid from Kraft - even if not at the levels forecast by some analysts - could see the hedge funds sell. And sell fast.

Earlier this afternoon, I saw a blog on the website of UK regional newspaper the Birmingham Post. It also pointed out the arrival of the hedge funds could hit Cadbury's bid to remain an independent company.

However, one interesting strand the blog picked up upon was the fact that UK (now publicly-owned) bank RBS is providing Kraft with financial support - which is sure to add to the ire of both Cadbury's supporters and those exasperated at the bank bail-outs.

Here in the UK, there has been a growing perception that, even though the banks are owned by the state, the public can do little to influence their strategy, especially when it comes to freeing up lending to small business and individuals.

And the Birmingham Post blogger insists the association between RBS and Kraft provides the Cadbury saga with "one final twist".

"The thought of us as taxpayers bailing out a hopelessly run bank so that it can then support a US multinationals' attack on a well run British based firm would have beggared belief 18 months ago. Not now, given the weird and wonderful world we live in."


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