Cadbury’s pension fund is seeking assurances from Kraft Foods over the US food giant’s ability to meet the UK confectioner’s pension commitments.
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In an open letter to Cadbury pensioners, chairman of the trustees John Hatchett said that the fund had been “monitoring events closely” after the Dairy Milk maker’s board recommended Kraft’s GBP11.5bn (US$18.5bn) takeover bid.
Describing the existing pension covenant with Cadbury as “strong”, Hatchett insisted that the pension fund would expect the same level of commitment from Kraft, if and when the merger goes through.
“The company has stood behind the pension fund for more than a hundred years. It has been a supportive sponsor throughout that time and we have had no doubts about its willingness and ability to pay benefits as and when they fall due. We will be looking for the same security in the future from Kraft,” Hatchett insisted.
The pension fund has entered into talks with Kraft and is seeking to secure a legally binding company covenant ensuring the US company’s willingness and ability to meet Cadbury’s financial obligations to its retirement scheme.
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By GlobalDataShould Kraft be unable or unwilling to provide such assurances, the pension fund would then consult the Pension Regulator, with further legal action an option. Such action could delay Kraft’s takeover of Cadbury.
Cadbury shareholders are due to respond to the offer by next week (2 February).
