Skip to main content

Cup Hands: there goes Cadbury

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.

Comments

Josh Rimer said…
And did you see how upset everyone on Twitter in the UK was about it being an American company? I talk about it in my video and show some of their tweets at http://www.youtube.com/watch?v=RdGCJMwIdM4 - they're convinced an American company is going to ruin the chocolate!
Anonymous said…
Great post Cicero.

It's also very disturbing how much Kraft are borrowing to pay for it. If there is trouble in the dollar and the pound over the next 18 months, with interest rate hikes, will they be able to service the loans? And if not, what then? Will they be a takeover target or will they simply collapse?

A very stupid decision all round.
Newmania said…
I`m in two minds here . It has been obvious to me for years that Cadbury`s were losing the plot . The products were poor quality and never seemed to hit the spot ..( well ok there are cream eggs but thats it )
Who would buy Cadbury`s when there was a Galaxy sitting next door ? No-one obviously , so the first fault here is with the Company.It could not have just gone on as it was

Having said that I am also horrified to learn of the amount of borrowing involved and this when credit is supposedly not flowing.
Anonymous said…
We still have time to persuade the shareholders that this is not a good idea.They have until February 2nd before they vote.If enough of them vote no then it cant go ahead.There is a petition you can add your name to at:
http://www.petitiononline.co.uk/petition/keep-the-cadbury-tradition-alive/25/
Wonderful article, very well explained. I glad to see this blog, such an informative article, Thanks for share th

Popular posts from this blog

Cicero ReDux

By Special Request of Baroness Scott and Mark Valladares... Cicero's Songs returns: bigger, longer and uncut.
October 1st marked the half way point of the Estonian Presidency of the European Union.  Perhaps for many people such an anniversary is of passing interest at best.  Yet the conduct of the Estonian Presidency is reinforcing just how forward looking and innovative the most northerly of the Baltic States has become.
Estonia is a country that wants to live in the future, and with its openness and innovation, that future seems a lot closer than almost anywhere else in Europe
It is not that Estonia does not “do” the past: the picturesque cobbled streets of old Tallinn have tourist crowds a-plenty enjoying the mediaeval architecture in an Indian summer of sunshine and blue skies.  The real point is that Estonia refuses to be a prisoner of its past. Lennart Meri, Estonia’s President in the 1990s- who spent years of his childhood in Siberia- once told me that the country had to conc…

Trump and Brexit are the Pearl Harbor and the Fall of Singapore in Russia's Hybrid war against the West.

In December 1941, Imperial Japan launched a surprise attack on the United States at Pearl Harbor. After the subsequent declaration of war, within three days, the Japanese had sunk the British warships, HMS Prince of Wales and HMS Repulse, and the rapid Japanese attack led to the surrender of Hong Kong on Christmas Day 1941 and the fall of Singapore only two months after Pearl Harbor. These were the opening blows in the long war of the Pacific that cost over 30,000,000 lives and was only ended with the detonations above Hiroshima and Nagasaki.

"History doesn't often repeat itself, but it rhymes" is an aphorism attributed to Mark Twain, and in a way it seems quite appropriate when we survey the current scene. 

In 1941, Imperial Japan, knowing its own weakness, chose a non-conventional form of war, the surprise attack. Since the end of his first Presidential term, Vladimir Putin, knowing Russia's weakness, has also chosen non-conventional ways to promote his domestic powe…

The American National nightmare becomes a global nightmare

It is a basic contention of this blog that Donald J Trump is not fit for office.

A crooked real estate developer with a dubious past and highly questionable finances. he has systematically lied his way into financial or other advantage. His personal qualities include vulgarity, sexual assault allegations and fraudulent statements on almost every subject. 

He lost the popular vote by nearly three million votes.

He has, of course, been under criminal investigation practically since before he took the oath of office. The indictment of some of closest advisers is just the beginning. His track record suggests that in due course there is no action he will not take, whether illegal or unconstitutional in order to derail his own inevitable impeachment and the indictments that must surely follow the successful investigation of Robert Mueller into his connections with Russia.

However, all of that is a matter for the American people. 

It is also a matter for the American people that Trump is cheating…