Britain’s last chocolatier sets down a gauntlet for his Kraft successor

WARTIME is over for Roger Carr. Having held up his head defiantly throughout a five-month hostile bid battle from US food giant Kraft, the former Cadbury chairman is looking considerably more relaxed in demeanour nowadays, though his bruised rhetoric speaks volumes.

Carr, in a speech on “Hostile Bids and Takeovers” at the Saïd Business School in Oxford on Tuesday evening, referred variously to a “predator” and its “prey”, a “siege” of Cadbury, a “phoney war” and an “attack that was neither encouraged nor deserved”.

“Hardly a fairy-tale ending to a great company, robustly and vigorously defended, which had recently started to do everything right,” Carr boomed to his audience, “but which as a result of the system fell victim to a company who had a reputation and a record for doing many things wrong...”

It’s not the most resounding of endorsements for Cadbury’s new owner, just a few short weeks after Kraft finally secured a takeover bid with an 850p-a-share offer for the company – a £4bn premium to the undisturbed value of the business on the day before the original approach.

22 December, 1946

Current positions:
Chairman, Centrica
Non-executive director, Bank of England

Previous positions:
Chairman, Cadbury (2008–2010); took over the chair on the retirement of Sir John Sunderland. Sunderland said Carr “combined excellent financial, capital markets and operational credentials with a deep understanding of our brands.” Chairman, Mitchells & Butlers (2003–2008)
Chairman, Chubb plc (2000–2002, following the breakup of Williams)
Chief executive, Williams Holdings (1994–2000)

“Kraft has certainly got a challenge on its hands,” muses Carr, thoughtfully. “They paid a fair price for an excellent company but in paying that, their own shareholders will now be looking for them to perform. They have to face the difficulty of taking a business that had its own momentum and its own culture and its own sense of self, and having to integrate that into a huge conglomerate while still preserving the spirit of the people. These are not easy things to achieve and the momentum of a business is critically important.”

“I think they’re setting about the task positively, and I’m sure their intentions are good ones, [but] we shall see with the passage of time how well they do.”

Carr, who is himself now a shareholder in Kraft, will be certainly be watching the progress of his nemesis Irene Rosenfeld like a hawk. He readily admits there’s no love lost between the pair, remarking wryly that they were “never on Christmas card terms, either before or after the deal” and revealing that after the Kraft boss fired the opening shot across Cadbury’s bows on a languid August afternoon last year, the two did not speak again until 17 January, two days before the publication of the final recommended offer.

“However, as a professional I shall watch with interest and I wish her well because I wish Cadbury well,” Carr continues, clearly choosing his words with care. “Cadbury still exists even under different ownership – it was 50 per cent owned by Americans before, it happens to be 100 per cent owned by Americans now, but I hope to see the people in the business prosper.”

Carr – a seasoned businessman, having spent the best part of two decades toiling to build up conglomerate Williams Holdings and with a raft of directorships under his belt, including his current positions at energy group Centrica and on the Court of the Bank of England – isn’t known for emotive outbursts or flamboyance.

Yet despite his usual preference for remaining the calm, collected brains behind the operation, his measured, collected responses betray an undertone which is consistently tinged with sadness.

“You can’t conduct that kind of role in an abstract, detached way – with Cadbury, I was chairman of a wonderful company and it needed fighting for,” he explains. “It was a battle where Kraft was trying to steal Cadbury, and it was important that it didn’t. And in the end, it didn’t; we got the value.”

But that battle, as Carr goes on to explain, has thrown up a potential dilemma for the Takeover Panel.

“Elements of the system have been brought into question, and without adjustments it is inevitable that on occasions, bad things may happen to good companies,” he says, darkly.

Carr has already put forward three points on which he would like to see a review of the current City Code on Takeovers and Mergers, each more radical than the next. He proposes increasing transparency by reducing the level at which movement in shareholdings have to be disclosed from one per cent to just 0.5 per cent; raising the acceptance level for takeovers from 50 per cent to around 60 per cent, in order to mitigate the influence of short-term investors over the committed longer-term shareholder base; and, most controversially, considering a move to prevent shares changing hands during the offer period from carrying voting rights, again to prevent against the manipulative power of short-term hedge fund investors.

“For me personally, the third point is a bridge too far – adjusting the voting rights is something we should consider but removing what is part of the lubrication of wealth creation is always dangerous,” Carr explains, echoing the views of alarmed free marketeers all over the City.

“But there are some who would say that the loss of British industry needs to be considered in that context, and if there is a way of stopping it then perhaps that is what should be done. It is an extreme approach but one some would consider appropriate.”

Undoubtedly, it is a point which will be debated hotly in the City for some time to come, even after the dust has settled following one of the most exciting M&A battles of our time.

But as the big corporates begin to circle and the business world waits with bated breath for news of Carr’s next career move, the man himself is keeping his options open.

“I’m still gainfully employed at Centrica, which is a pretty material business, and I’ve got the Bank of England. Both of those things are fulfilling, but there is no doubt that space has occurred and I don’t intend to fill it in the long term with endless golf or leisure,” he says, a twinkle in his eye.

“If something interesting comes along and somebody wants me, then I think I’ll be available for duty.”