Belfast Telegraph

Saturday 19 April 2014

Cadbury deal sparks UK reform of takeovers

A raft of changes to UK takeover rules was put forward as part of a so-called "Cadbury Law" after the chocolate firm's controversial takeover by US giant Kraft.

The Takeover Panel outlined proposals to make hostile takeovers more difficult, although it rejected some of the more radical calls for overhaul.

Key recommendations include ensuring companies take into account the impact of a takeover on employees and giving them greater opportunity to make their views known.

The panel also plans to restructure its "put up or shut up" regime to force companies to make a formal bid or walk away, while also introducing rules that will see all fees disclosed.

Kraft's £11.6bn takeover of Cadbury caused a furore, in particular for its treatment of employees and its decision to shut the firm's Somerdale factory having initially suggested it would be retained.

The proposals will require firms to stick by statements made on employees and office locations for at least a year - a proposal that could have changed the way Kraft communicated its intentions on the Somerdale site.

Cadbury's takeover sparked debate over the UK takeover rules, with the group's former chairman Roger Carr making passionate pleas for firms of national interest to be offered greater protection against hostile bids from foreign firms.

Kraft had already been slammed by the Takeover Panel for misleading Cadbury's employees and shareholders over whether it would save the Somerdale plant, near Bristol.

But a number of key figures - including Business Secretary Vince Cable - have made the case for stricter rules.

The Panel rejected extreme measures put forward, such as raising the threshold for acceptance of hostile bids from 50% plus one.

It also dismissed recommendations for shares bought in hostile takeover battles to forgo their associated voting rights.

Lindsay Tomlinson, chairman of the Takeover Code Committee, said: "The Code is not concerned with the financial or commercial advantages of a takeover or with questions of wider public interest. Nevertheless, it is clear that some rebalancing of the rules is needed."