THE Business Select committee will today question whether UK takeover laws should be tightened in the light of Kraft’s acquisition of Cadbury.
It is expected to criticise the power short-term stakeholders, including hedge funds, can wield over a company’s future.
Committee chairman Peter Luff told City A.M.: “I think we need to look seriously at future takeover activity in this country to ensure there are long term benefits for British companies and the balance of power is not held by investors who do not have the future of the company at heart.”
The report will mirror comments made by business secretary Peter Mandelson last month at a Mansion House speech, in which he called for tighter regulation surrounding mergers and acquisitions. However, the committee will fall short of recommending changes be made to takeover law.
It will single out Kraft chief Irene Rosenfeld for criticism after she snubbed the hearings, and will slam the firm’s directors for not engaging more with union members.
The Committee is furious that Kraft appeared to make a U-turn over the future of the Cadbury factory in Somerdale and asked for guarantees for two more factories.
Kraft acquired Cadbury on 2 February after a drawn-out skirmish with shareholders. Cadbury failed to secure an eleventh hour “white knight” rival bid from US confectioner Hershey and eventually capitulated to Kraft for 840p a share. Despite the board recommending this price, some shareholders had hoped to hold out for more than 900p a share.