"They are a plastic cheese company and this is the jewel in the crown." The great-granddaughter of George Cadbury expressed the feelings of many as Britain's favourite chocolate-maker succumbed to an £11.9bn cash and share offer from US food giant Kraft, ending 186 years of independence. Kraft raised its bid from around 770p a share to 850p and increased the cash component to 60% from 40% of the total to secure the deal.
Cadbury chairman Roger Carr had consistently deemed the original offer "derisory", said Nils Pratley in The Guardian. Now we know what he meant: "give us another 10% and our defences will crumble". Talk about a "bargain" a bidder would have had to pay over 900p "even to get close" to previous takeover valuations in the confectionery industry. Cadbury, which produced a "sparkling" performance over the past 18 months, has been sold too cheaply and ended up in a sprawling, low-growth conglomerate because institutional investors opt for short-term profits over long-term investment.
Cadbury shareholders decided that 830p-850p 50% higher than the share price before Kraft first bid "would be good enough", said David Prosser in The Independent. Too bad. Cadbury is "an international business with international shareholders" who can do what they want with their shares.
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It's small wonder the Cadbury takeover has revived concern over Britain's open-doors policy on foreign investment and ownership. Of course, Britain "does not want to become a branch office" for foreign companies, said the Financial Times. But erecting barriers isn't the answer; the key is to make Britain an appealing business location, with a skilled workforce and a predictable tax regime, so that traffic in offsets traffic out.
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In any case, it's hardly as though we're being taken to the cleaners by foreigners, said Hamish McRae in The Independent. Last year the difference between the income on overseas plants and subsidiaries that British firms earned, and what we paid out to foreign ones here, was £60bn in our favour. We are doing just fine out of globalisation.
CBRY: £8.38; 12m change 43%
KFT: $29; 12m change -3%
