US food giant Kraft was irresponsible and unwise in reversing its commitment to keep Cadbury's Somerdale plant open following its successful takeover battle for the chocolate maker, a committee of UK lawmakers said.
The Business, Innovation and Skills Committee also urged Kraft today to make no further compulsory redundancies or plant closures in the UK over the next two years, following its £11.7 billion Cadbury takeover.
The report from politicians comes as Britain's Takeover Panel is consulting on possible changes to rules governing mergers and acquisitions, and after UK Business Minister Peter Mandelson has openly expressed his disquiet about the Cadbury takeover.
Kraft promised to keep Cadbury's plant at Somerdale near Bristol in south west England open when it launched its hostile bid for Cadbury in early September 2009 but reneged shortly after it won the battle with the loss of 400 Cadbury jobs.
The committee urged Kraft to support Cadbury's pension arrangement, manage Cadbury from the UK, support its links to cocoa farmers and also clarify its intention on the future of existing plants and employment levels in Britain.
"Kraft gave us a number of undertakings on the future of Cadbury, which we have put in the public domain. Kraft will have to deliver, in full, on these undertakings if it is to repair the damage caused to its reputation by the woeful handling of the closure of the Somerdale factory," said chairman of the select committee Peter Luff in a report.
Cadbury in 2007 announced the closure of the 75-year-old plant as it was built on a river flood plain with little room for expansion, with manufacturing work transferring to Poland and Cadbury's main UK plant at Bournville in Birmingham.
When Kraft launched its Cadbury bid in early September it said, "We believe we should be in a position to continue to operate the Somerdale facility", and reiterated this commitment in its offer document to Cadbury shareholders in November.
The report added: "We conclude that Kraft acted both irresponsibly and unwisely in making its original statement that it believed that it could keep the Somerdale factory open."
The committee was disappointed Kraft chief executive Irene Rosenfeld did not give evidence, "Irene Rosenfeld's attendance would have given an appropriate signal of Kraft's commitment to Cadbury in the United Kingdom," it added.
The report comes at an awkward time for Peter Kiernan, a senior banker at Lazard, who is director general designate of the Takeover Panel but has had to delay taking up his role until the completion of the Panel inquiry as he was an adviser to Kraft in the Cadbury takeover.
Reuters