KRAFT chairman Irene Rosenfeld is planning a charm offensive to persuade doubters that the US takeover of iconic chocolate giant Cadbury will be a good thing for the UK.
Her first task will be to woo Legal & General (L&G), Cadbury’s second-largest shareholder, which sent out a combative message yesterday. L&G slammed the £11.7bn offer which it said “fails to fully reflect the long-term value of the company”.
Rosenfeld, whose takeover bid has been recommended by the Cadbury board, has told opposite number Roger Carr that she is keen to give a strong message to Cadbury’s 6,900 UK employees spelling out how she intends to take the company forward.
Carr told City A.M. that Rosenfeld had emphasised during meetings that she wants to give a “message to the Cadbury people”. “For them it’s very important for the future growth of their company,” Carr said.
The move comes amid a flurry of concern as Cadbury’s 186-year history as an independent company comes to an end. Unions fear Kraft’s estimated £22bn debt pile after the deal will increase pressure to cut staffing costs.
Charles Stanley analyst Jeremy Batstone-Carr predicted job losses would not be immediate, but would come two years into the integration process as the merged group tried to meet ambitious earnings targets.
Workers’ group Unite is seeking assurances from Kraft’s management on job security. Business secretary Lord Mandelson, who had thrown his weight behind keeping Cadbury independent, said he had now invited Rosenfeld for talks on the details of Kraft’s plans. Prime Minister Gordon Brown also said he was determined to maintain investment in Cadbury’s UK operations.
Carr said that after securing an 850p per share bid from Kraft he would now give the US group “ease of entry” into Cadbury. He admitted that, given an equal financial offer, Cadbury would have preferred to do a deal with Kraft’s rival Hershey, but he added that the Kraft recommendation was “all about value”.
Carr’s discussions with Rosenfeld began with a telephone conversation on Sunday evening and continued with a meeting the following morning at the Lanesborough Hotel.
Rosenfeld offered Carr 830p per share. Carr held out and managed to negotiate the figure up to 840p plus a 10p dividend, sufficient to recommend to the group’s shareholders.
Sources close to the deal suggested shareholders would acquiesce despite L&G’s resistance. Standard Life appeared to do a U-turn, saying it was “supportive” of the bid having previously held out for 900p per share.
Meanwhile, chances of a gatecrasher bid from Hershey faded. Kraft has imposed a £117m break clause on Cadbury.