Union warns that 7,000 Cadbury jobs under threat

UNION leaders have warned that up to 7,000 jobs could be lost if Kraft's hostile bid for chocolate maker Cadbury is successful.

Unite claim Kraft's £22bn of debt would put the company under pressure and lead to jobs being axed.

The union has issued a briefing to Cadbury investors asking them to put the wider public interest implications of losing Cadbury's independence before the "narrow issue" of share price.

The document claims that the job losses could come if Kraft moved the Cadbury operation to the US.

Unite's national officer for food and drink Jennie Formby said: "Cadbury has clearly demonstrated its strength as a stand-alone company.

"Contrast that with Kraft's excessive debt, under-performance and the unacceptable risks this brings for Cadbury and it is hard to see any wisdom in this bid whatsoever."

Meanwhile Italian chocolate maker Ferrero pulled out of discussions with US confectioner Hershey over a joint bid for Cadbury.

Ferrero’s management decided the leverage involved in an offer for the 180-year-old British company would not fit in with the controlling family’s long-term strategy.

The Italian firm is understood to have told its advisers at Mediobanca it would not pursue the deal after lining up €4.5bn (£4bn) in financing.

The news deals a huge blow to Cadbury as it means a counterbid to Kraft’s £10.8bn hostile approach is less likely.

Kraft immediately upped the ante by increasing its 2009 earnings guidance from $1.97 to at least $2 per share.

Chief executive Irene Rosenfeld promised "top-tier performance, with or without Cadbury".

Business secretary Peter Mandelson has called a meeting of key institutional investors tomorrow – shortly before Cadbury releases full figures for 2009.

He is expected to pressure shareholders not to sell their Cadbury paper for a short-term gain.