Kraft Foods’ success in winning over the Cadbury board with a higher takeover bid for the 180-year-old confectioner marks a “very sad day” for UK manufacturing, Unite the union has claimed.
The US food giant had until midnight to raise its bid for Cadbury – which previously stood at around GBP10.5bn (US$17.2bn) and had been repeatedly rebuffed by the UK firm’s management as “derisory”.
This morning, the two sides announced they had reached agreement on an offer that now values the Dairy Milk maker at GBP11.5bn. The Cadbury board will recommend the higher offer to its shareholders.
Since September, when Kraft made its first approach for Cadbury, objections were repeatedly raised by Unite, the union representing the confectioner’s workers in the UK and Ireland.
According to the union, talks with Kraft management failed to assuage concerns that the US group would not invest adequately in Cadbury’s brands and that jobs would be lost as the company looked to cut costs.
Kraft is expected to borrow GBP7bn to finance its higher offer, which was a 9% premium on its initial bid, tabled in December.
Following the announcement this morning, Unite said that the increased bid and the “continued exclusion of workers and key shareholders” from the takeover consultation, means its concerns for Cadbury’s future and the future of nearly 7,000 workers in the UK and Ireland “very much remain”.
Jennie Formby, Unite’s national officer for food and drink, said: “This is a very sad day for UK manufacturing. A successful, iconic, independent UK brand will now be owned by a giant company with massive debt.
“We have very real fears about how Kraft will repay its debt, particularly as it has ratcheted it up still further in order to purchase Cadbury. Whatever good intentions Kraft may have towards Cadbury’s workforce, the sad truth is there will be an irresistible imperative to pay down their debt, and this raises real fears for jobs and investment in this country.”
Unite said it will now be seeking “urgent” meetings with the senior management of both Kraft and Cadbury looking for guarantees over jobs and sites in the UK and Ireland to put its members’ fears at rest.
Speaking at a press conference in London, UK Prime Minister Gordon Brown commented on the agreement.
“We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure.”
Cadbury employs around 45,000 people in 60 countries, with 5,600 staff at eight manufacturing sites in the UK and Ireland, including a facility in Somerdale near Bristol, which is scheduled to close, as well as its Bournville factory in Birmingham.