Lord Myners joins call for investigation into Kraft's takeover of Cadbury
City Minister Lord Myners joined calls for an overhaul of the City takeover code in the wake of the Cadbury deal.
The financial services secretary said takeovers “frequently fail to deliver on promises and allow no voice for other stakeholders, including employees and key customers and suppliers”.
His comments came as it emerged that a complaint against Kraft was lodged with the City takeover panel alleging the US group misled Cadbury employees and investors during its battle for the Dairy Milk maker.
A local campaigner and Conservative party candidate wrote to the panel complaining that they believe Kraft breached takeover rules when it pledged to keep the Somerdale factory open near Bath, only to change its mind soon after the £11.5 billion Cadbury deal was completed.
The US food giant attracted strong criticism over the Somerdale decision, with the factory now set to close with the loss of hundreds of jobs.
It is thought that the takeover panel launched an inquiry into the Kraft takeover following the complaint to examine comments made by Kraft executives during the buyout.
Kraft officials said in initial approaches to Cadbury that the group “believes it will be in a position to continue to operate the Somerdale facility”, despite the UK firm’s plans to move production to Poland.
However, in February the US firm announced that the plant would shut by 2011, less than a month after winning a bitter five-month tussle with Cadbury.
In a speech to the Smith Institute last night, Lord Myners welcomed news last month of a consultation to review the code.
However, he said there should also be a requirement for shareholders and not just the board of directors in bidding companies to have access to independent advice to make up their minds on any bid.
He added: “But ultimately the call for change will not come from the Government.
“The owners of firms that have lost so much from ill-advised takeovers must generate the momentum for reform.”
His comments echo the sentiment of a speech made by Business Secretary Lord Mandelson last week in which he asked for takeover rules to be changed to benefit companies’ workforces rather than short-term City speculators following the Cadbury sale.
Lord Mandelson said directors should act more like “stewards” looking after their company’s long-term interests rather than “auctioneers” selling to the highest bidder.
There was public anger that the Government had no powers to block the Cadbury acquisition or to demand commitments from Kraft on UK jobs.