Blog: Dean BestThe after-taste from the sale of Cadbury lingers on

Dean Best | 21 October 2010

Eight months on and Kraft Foods' takeover of UK confectioner Cadbury is still making waves.

Today (21 October), the UK's Takeover Panel proposed tougher rules for bidding companies and greater protection for employees in some of the biggest changes to the country's mergers and acquisitions regulations for decades.

The panel, which believes the M&A environment is weighted in favour of hostile bidders, plans to increase protection for UK-listed companies subject to takeover bids.

Potential bidders will have to show their hand sooner under proposed changes to the 'put up or shut up' clause in UK takeover regulations. Under the panel's proposals, bidders would have four weeks from their name being made public to either declare a formal offer or withdraw interest. 

The reforms follow the Takeover Panel's criticism of Kraft Foods' GBP11.5bn acquisition of Cadbury earlier this year.

In a rebuff to Kraft's handling of the deal, the panel said its plans would better protect employees by forcing bidders to be clearer about their plans for synergies.

Bidders would have to state whether or not they intended to sell or consolidate assets at the target company and would have to stick to this plan for one year from the takeover offer becoming unconditional.

When Kraft first went public with its interest in Cadbury last September, the US food giant initially said it believed it could keep open Cadbury's plant in Somerdale in south-west England - a site the Dairy Milk maker had already decided to close. When it finalised its takeover of Cadbury four months later, Kraft was forced to back pedal and said it would have to close the facility.

The panel's proposals would also seek to "improve the ability of employee representatives to make their views known".

The watchdog also aims to force bidding companies to disclose more financial information about themselves and how they would finance the deal. Bidders would also have to publish a prospective balance sheet for the combined entity.

The panel's recommendations follow a public consultation, completed in July. It said that it would issue a further consultation on the proposals "in due course".


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