|19-01-2010, 07:38 PM||#1|
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Fears for thousands of British jobs after Cadbury finally succumbs to £11.5bn takeover by U.S. food giant Kraft
By Daily Mail Reporter
Last updated at 5:59 PM on 19th January 2010
Thousands of Cadbury's workers were left fearing for their jobs today after US food giant Kraft completed its £11.9 billion takeover of the historic British firm.
Union leaders today described the successful bid for Cadbury as a 'sad day' for UK manufacturing and voiced fears for the future of thousands of jobs.
But as Kraft finalised the multibillion-pound takeover for the iconic chocolate maker, Gordon Brown said the Government was 'determined jobs in Cadbury can be secure'.
If shareholders back a deal, it would also bring to an end Cadbury's history as an independent company dating back to 1824.
Scroll down to see video report
A protest sign is pictured outside the head office of Cadbury in Birmingham as the takeover was confirmed
A passer-by stops to read a sign left outside the Bournville factory, Birmingham, after it was announced that Cadbury had backed a £11.5 billion takeover offer from its US suitor Kraft
Mr Brown said today: '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.'
One worker outside the Bournville plant said: 'Nobody really knows what is going on or what this might mean in terms of job losses, but inside that factory there are a lot of people who are very, very worried about the future - the future of the company and their own future, their jobs and their families.'
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 currently scheduled to close, as well as its Bournville factory in Birmingham.
Shares in the chocolate group surged 3 per cent today to 836p, following a 1.7 per cent gain yesterday as the market anticipated a higher offer.
'The boards of Kraft Foods Inc. and Cadbury PLC confirm that they are finalising the terms of a recommended offer for Cadbury,' the companies said in an announcement to the exchange.
Unite complained that workers had been excluded from the takeover consultation and said it had concerns for what will happen to 7,000 jobs in the UK and Ireland.
The union said today's development meant Kraft had persuaded large institutional shareholders that an increased bid for Cadbury was enough to swap a 200-year history of growth and independence for a place within the conglomerate's growing portfolio.
Enlarge British protester Ray Egan, dressed as John Bull, protests against the sale of Cadbury outside the company's headquarters in Birmingham
A worker on the production line at the Bournville factory, Birmingham. Unions fear the takeover will mean British jobs will be lost
The Cadbury's logo is seen displayed outside the Somerdale plant in Keynsham, Bristol
Cadbury shareholders now have until February 2 to accept Kraft's revised bid.
Kraft is offering 840p a share, as well as a previously announced Cadbury dividend of 10p a share.
Kraft also said today that it was lowering the shareholder acceptance level to a simple majority of 50 per cent.
Cadbury's staff will now scrutinise Kraft's statements to try to get an indication of its intentions towards the business.
When it made its initial advance last year, the US firm said a takeover could benefit staff.
It said it hoped to keep open Cadbury's Somerdale facility near Bristol, which is currently scheduled to close later this year, while also investing in the firm's Bournville factory near Birmingham.
A spokeswoman for Kraft today said: 'Our intentions at the moment are remaining the same, obviously nothing is finalised.'
Cadbury's began life as a grocer's shop in Birmingham's fashionable Bull Street in 1824.
Quaker John Cadbury sold goods including cocoa and drinking chocolate from his shop for seven years before launching his own small-scale production and renting a small factory in the city.
In 1879 a new 'factory in the garden' was built on land outside Birmingham.
The site was named Bournville and from this George created a visionary model village for industrial workers to live in.
By 1900 the estate included 330 acres of land with 313 cottages housing workers from Cadbury and elsewhere.
The Bournville Trust still exists and the village itself is home to around 25,000 people.
Cadbury launched its first solid milk chocolate for eating in 1897. This was created by adding dried milk powder to cocoa solids, cocoa butter and sugar.
A few years later, Dairy Milk was launched to rival the dominant Swiss milk chocolate brands.
The British confectionery giant has swallowed many smaller brands as it grew to become the world's number one sweet firm.
It merged with JS Fry & Sons in 1919 in order for both companies to compete against Rowntree.
Cadbury employs around 45,000 people in 60 countries.
Cadbury's Dairy Milk is the UK's top-selling chocolate bar - more than 250 million are sold every year in 33 countries.
But many will remember the plight of a previous Kraft target, Terry's, which the firm took over in the 1990s.
The UK chocolate maker, whose products include Terry's Chocolate Orange and Terry's All Gold, saw its York manufacturing plant and warehouse closed after almost 70 years in 2005 as part of a Kraft restructuring programme.
Production from the site, which had made up to 20,000 tonnes of chocolate each year for the domestic market, was transferred to Kraft facilities in Sweden, Belgium, Poland and Slovakia.
Consumers and unions reacted with dismay, warning that the company’s world famous brands — including Dairy Milk, Flake and Wispa — and its paternalistic Quaker heritage, are at risk.
Critics said that servicing the £7 billion
of debt taken on to the finance one of the biggest hostile takeovers seen in the City for years would mean inevitable
cuts that could harm the quality of Cadbury brands.
Kraft today said the Cadbury takeover had the potential to create 'substantial further cost savings' than those already being implemented by the separate companies.
But Unite national officer Jennie Formby 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.'
The British company had fought hard against Kraft's initial offer announced in December, dismissing it as a 'derisory' bid from an unfocused, underperforming conglomerate.
The American company may still have a battle winning endorsement from Cadbury shareholders, and US chocolate maker Hershey Co. has until Saturday to decide whether it wants to make a rival bid.
David Cumming, head of U.K. equities at Cadbury shareholder Standard Life, said on Monday that Kraft needed to aim above 900 pence to secure support from long-term shareholders.
Reassurance: Cadbury chairwoman Irene Rosenfeld is expected to tackle concerns over the company's heritage
Kraft, based in Northfield, Illinois, had raised the cash portion of its offer earlier this month after selling its North America pizza business to Nestle for $3.7 billion.
Under the terms of the deal, Kraft will raise its 769p-a-share bid to 840p and offer an extra 10p-a-share dividend.
This will take the total amount to the crucial 850p-a-share bar set by Cadbury chairman Roger Carr.
During a day of fraught negotiations, the weeks of acrimony gave way to friendly negotiations in which Kraft, led by chairman Irene Rosenfeld, initially offered Carr 820p-a-share.
But he resolutely refused this offer, holding out for 850p.
After a period of to-ing and fro-ing, Rosenfeld accepted that she was going to have to pay the full equity and cash amount requested by Carr.
The enhanced part of the deal - the equivalent of 81p-a-share more than Kraft had originally offered - will be paid entirely in cash raising this element of the bid beyond 50 per cent.
This will be important for shareholders, many of who are not keen to hold Kraft stock.
By allowing Rosenfeld to offer 840p with a 10p dividend, Carr granted her an important key fig leaf.
She will be able to tell her shareholders the headline figure was 840p and that she will allow Cadbury to pay its shareholders the 10p dividend.
In a statement due to be issued later today Rosenfeld is expected to offer assurances over jobs after being ‘spooked’ by comments made by business secretary Peter Mandleson last month.
He had said to Kraft: ‘If you think that you can come here and make a fast buck, you will find that you face huge opposition from the local population... and from the British Government.'
Rosenfeld will talk about Cadbury’s heritage as a Quaker firm and give assurances over both plants and jobs.
The enhanced offer will be seen as a good result for Cadbury chairman Roger Carr, and chief executive Todd Stitzer.
Both have held firm against the low ball offer from the American conglomerate in a game of brinkmanship.
Kraft - the second biggest food company in the worldFrom humble beginnings - and a disappointing first year in business - American giant Kraft has grown to become the second largest food company in the world behind Swiss Nestle.
Founded by Canadian James L Kraft , a door-to-door cheese wholesaler, in Chicago in 1903 and a horse - the firm’s first set of accounts showed a loss.
Determined to succeed, Kraft kept plugging away, and drafted in his four brothers to help.
The firm quickly marked itself out from the competition using some early marketing and product innovation.
One brainwave was pasteurised cheese that needed no refrigeration and lasted longer on the shelf than its rivals.
In 1924, the business, by now known as The Kraft Cheese Company, listed on the stock market and decided to go international.
It opened sales offices in London and Hamburg.
Four year later it acquired the rival Phoenix Cheese Company, maker of Philadelphia cream cheese.
The next 40 years saw the company grow into a sprawling conglomerate which owned the battery maker Duracell and Tupperware, maker of the eponymous plastic pots.
But the 1980s were pivotal to Kraft as it first shed Duracell and was then was bought by Philip Morris for £8bn and merged with the cigarette-maker's General Foods business.
In 2000 it merged it with some of its other businesses and listed it once again as a separate company on the New York Stock Exchange.
Today the group employs almost 100,000 people worldwide and is the owner of brands such as Dairylea, Carte Noire and Terry's Chocolate Orange.
Sales last year were a massive £26bn, yielding operating profits of £3bn.
Read more: http://www.dailymail.co.uk/news/arti...#ixzz0d5ZUlc5W
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|20-01-2010, 12:32 AM||#2|
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Sometimes mergers don't always go as well as planned. Look at AOL/Time Warner for a good example.
|20-01-2010, 12:40 AM||#3|
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