The UK’s Takeover Panel has slapped the wrist of Kraft Foods over the US food giant’s indication it could keep open a local Cadbury plant – only to later admit the site would close.
The City watchdog criticised Kraft’s conduct over the Somerdale facility in the south-west of England, which is set for closure.
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When Kraft first went public with its pursuit of Cadbury in September, the US group indicated that it hoped to keep Somerdale open.
Nevertheless, a week after securing shareholder approval for its acquisition of Cadbury in February, Kraft said that “extensive talks” with “senior management” led it to decide that the site must close, with the loss of around 400 jobs.
Cadbury announced in 2007 that it would close the Somerdale site and move production to Poland in a bid to cut costs.
However, Kraft’s apparent U-turn caused consternation in the UK where politicians questioned the US firm over its plans for the Dairy Milk maker.
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By GlobalDataThe Takeover Panel said Kraft had an “honest and genuine belief” that it could keep open the Somerdale site.
Nevertheless, the Panel argued that Kraft should not have issued a statement in September without knowing the details of Cadbury’s plans for Somerdale.
“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 … not a belief which Kraft had a reasonable basis for holding,” the Panel said.
