The long saga of Kraft's bid for Cadbury is now over. The board of the British chocolate company has now agreed that the bid from the American food giant should now go ahead. Personally I think it is the wrong decision at several levels. Firstly Kraft has a poor record in confectionery: their takeover of the Swiss Jacob Suchard thirty years ago was not a demonstrable success. and the once premium Suchard brands like Milka are now mostly also-rans in their markets. It is not clear to me that the Illinois-based company will be a particularly good steward of these businesses which have acquired a massive brand equity since the foundation of the Cadbury firm in 1824. After all the repeated takeover deals that Kraft has been involved with, from Phillip Morris to Nabisco are classic examples of value destroying M&A activity. There are also clearly going to be substantial job losses- with Cadbury's UK headquarters likely to be closed, and jobs transferred to Kraft's European headquarters in Zurich.
More than that though, I feel very uncomfortable with the way in which this deal has been concluded. The large pay-off to the Cadbury board: a reported £12 million to the managing director alone makes may question whether or not the British company's board simply put their own interests ahead of those not just of their workforce but also their shareholders.
The workforce at Cadbury have every right to feel somewhat betrayed- and the history of Cadbury makes the role of the workforce important. Cadbury was founded by a Quaker family upon Quaker principles. The huge pay-off that the board is now said to be in line for is an amount of money that would have shocked the founders as an example of naked greed. That it comes at the expense of the workforce whose interests Cadbury's founders always sought to protect and promote is -at best- a very unhappy situation, at worst it is a scandal.
If Cadbury was a French company, the job losses alone would make the French government at the least investigate the takeover. Unfortunately the real interests of the UK: maintain Britain as the headquarters of world class businesses are being drowned in the short term interests of the board of Cadbury.
This is a deal that Peter Mandelson should call in and at least investigate.
Yet he probably won't, and another part of Britain's business heritage is going to leave the UK. As we have seen with Nestle's takeover of Rowntree Mackintosh, being a branch of a global business diminishes British economic power and loses British jobs. Cadbury represents another step down for the UK and indeed for British companies on the London stock exchange.
A sad day indeed.