Unions fear for jobs as Cadbury board agrees to takeover offer

CHOCOLATE giant Cadbury looks set to fall into American hands after predator Kraft finally won over its board with an enlarged 11.9bn offer.

The bid eventually found favour with the Dairy Milk maker after four months of wrangling over a deal that will end the British firm’s 186-year independent history.

Kraft said it had “great respect for Cadbury’s brands, heritage and people,” but also highlighted “meaningful cost savings,” sparking fears of huge job losses.

Trades unions said they were seeking urgent meetings with Kraft, which makes Philadelphia cheese, seeking guarantees over jobs.

Prime Minister Gordon Brown also weighed in and said the Government was “determined... jobs in Cadbury can be safe”.

Speaking at a press conference at Downing Street, he said: “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, jobs in Cadbury can be secure.”

Cadbury employs around 45,000 in 60 countries. It has 5,600 staff at eight manufacturing sites in the UK and Ireland, including 800 at its Bassett’s Liquorice Allsorts plant in Sheffield.

Kraft bought chocolate company Terry’s in 1993 and closed its York factory in 2005 with the loss of 316 jobs.

Cadbury’s capitulation yesterday came after months of stiff resistance to the hostile takeover, during which its chairman Roger Carr attacked Kraft and its management, whom he claimed had a track record of “overpromising and underdelivering”.

But after Kraft upped its bid to 850p per share, including a 10p special dividend, the confectioner’s board was forced to recommend the bid.

“We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world,” Mr Carr said.

“We will now work with the Kraft Foods’ management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees.”

Kraft’s cash and shares deal was struck after all-night negotiations, beating a deadline imposed by takeover authorities.

Cadbury shareholders now have until February 2 to accept the bid.

After previous bids were dismissed as “derisory” attempts to “steal” the company, Kraft’s new bid comprises 500p in cash and 0.1874 new Kraft share.

Illinois-based Kraft’s bid, which first emerged in September, became increasingly likely to succeed as rivals Nestle and Italian chocolate maker Ferrero distanced themselves from an offer. The Takeover Panel has given Ferrero and America’s Hershey until January 25 to make a counter bid.

Hargreaves Lansdown analyst Keith Bowman said: “The likelihood of Hershey throwing its hat into the ring looks remote, given the required level of debt which the group would have to support.”

Union Unite warned that Kraft would continue its track record of cuts – which it said have totalled 19,000 jobs and 35 site closures between 2004 and 2008 alone – to pay for the acquisition.

Jennie Formby, Unite's national officer for food and drink, 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.”

But Kraft chairman and chief executive Irene Rosenfeld said the takeover “represents a compelling opportunity” for both companies’ shareholders.

Cadbury is attractive to Kraft because of its strong growth in emerging markets like India.