The battle for domination of chocolate and confectionery sales and production worldwide is under way with a hostile takeover bid by the US Kraft Corporation for the 195-year-old British company Cadbury. Under Stock Exchange takeover rules the 60-day window for hostile bids has started, with Kraft lodging the £10.2 billion offer, lifted from their September suggested figure of £9.8 billion.
The latest offer is expected to lift the share price to 820p. Cadbury is resisting, but has already indicated something in the region of 850p per share would be acceptable. Its resistance is driven solely by shareholder greed, not principle or loyalty.
All that is relevant to Cadbury is the share price, not the 195 years of history of the British company, the Quaker principles behind it, or the employment of over 1,000 workers.
The hostile bid comes from two key US corporate raiders who hold significant shares in Kraft – Warren Buffet, the second wealthiest man in the world, and Nelson Peltz, also a billionaire. In the past two years they have overseen takeovers of key brand names worth billions of dollars – Coca Cola, Wrigley, Budweiser, Proctor and Gamble, Stella Artois etc. Recession needn’t be a bad thing if you are a predator.
With the move on Cadbury, Kraft is trying to become the world market leader in confectionery, ahead of Mars and the Hershey–Nestlé alliance. Chocolate sales to China alone are worth $450 million ($50 million to Cadbury, $400 million to Kraft), to Russia $1 billion ($800 million Kraft, $200 million Cadbury). Cadbury has a $50 million market penetration of the US franchised via Hershey but then dominates in the former British Empire. Monopoly and profit dominate the worldwide machinations and manoeuvres of these companies.
The independence and retention of British-founded, British-based and sovereign confectionery business is vital in the context of retaining industrial structure, and social structure epitomised in jobs, training, skill and identity.
Kraft has promised the Unite union that if it takes over Cadbury it will keep open the Keynsham plant near Bristol and expand investment in the West Midlands Cadbury factories. Cadbury planned to close Keynsham and move production to Poland, threatening 500 jobs. But Kraft is also looking for £600 million savings from the merger with the Cadbury group.
When Kraft took over Terry’s it broke its promises and closed the York factory, transferring work to Eastern Europe in 2005. Why should anyone believe any promises from Kraft when Cadbury’s original business plan was to do exactly the same and move all except the West Midlands production to Poland? And when Nestlé took over Rowntree it cut the workforce from 33,000 to 3,000 and moved production abroad.