Cadbury family attacks £12bn takeover by ‘plastic cheese company’ Kraft
Jonathan Prynn, Consumer Business Editor19 Jan 2010
The Cadbury family today launched an attack on “asset strippers” Kraft after the US maker of Dairylea cheese sealed a £12billion hostile takeover.
Felicity Loudon, great granddaughter of George Cadbury, said: “For us to sell out to a company that doesn't bear any resemblance to us at all is a horror story. Kraft won't understand the history and quality of the company.
“Kraft will have to asset strip to afford this. They will cut corners, they will sell out. To me they are a plastic cheese company and this is the jewel in the crown.”
The fate of one of Britain's few remaining world class manufacturers was sealed in the City this morning when the Cadbury board confirmed it had accepted an improved 840p a share offer.
It brings to an end 186 years of independence dating back to John Cadbury's first coffee, tea and cocoa shop in 1824. The deal will also raise fears of job cuts at Cadbury, which has more than 6,000 staff in Britain, with major sites at Bournville, Birmingham, and Somerdale near Bristol, and more than 46,000 globally.
In a statement to the Stock Exchange, Cadbury chairman Roger Carr said: “We believe the offer represents good value for Cadbury shareholders and are pleased with the commitment that Kraft Foods have made to our heritage, values and people throughout the world.” The takeover will create the world's largest confectionery company but means that there are no more major British owned sweet and chocolate makers.
Consumers and unions reacted with dismay, warning that the company's world famous brands — including Dairy Milk, Flake and Wispa — and its paternalistic Quaker heritage, are at risk.
Critics said that servicing the £7 billion of debt taken on to finance one of the biggest hostile takeovers seen in the City for years would mean inevitable cuts that could harm the quality of Cadbury brands.
Professor Chris Bones, dean of Henley Business School and a former Cadbury executive, said: “The only way Kraft can service a debt burden of that size is to slash and burn on costs. Where's that money going to come from? Is it marketing, sales capability, research and development? These are big questions.
“For example, Kraft do not subscribe to Fair Trade. So are they going to keep Cadbury Dairy Milk as a Fair Trade proposition?
“Is this takeover really about the best interests of Kraft shareholders or is it about ego and bonuses and bankers' fees?”
There was outrage from fans of Cadbury products on the dozens of web-sites that have sprung up in support of the company.
Stephan Lloyd, a member of the Friends of Cadbury social networking site, wrote: “I think there should be a national boycott of Kraft/Cadbury products. I was against the deal from the start, Cadbury is an iconic British brand ... I'm gutted.”
Jennie Formby, national officer of the Unite union, said it would be seeking urgent meetings with the Kraft management to secure guarantees over jobs and manufacturing sites.
She said: “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.
“There are huge lessons to be learned from this takeover for UK business. Short-term City interests and institutional shareholders have dictated this process from the outset with little thought to the impact this sale will have on jobs, the supply chain or Cadbury's future.”
In September, Cadbury issued an open letter to Kraft chief executive Irene Rosenfeld slamming the bid, hitting out at the “unappealing prospect” of the chocolate maker being absorbed into “Kraft's low growth, conglomerate business model”.
But Ms Rosenfeld, who has remorselessly hunted down Cadbury since her first approach five months ago, insisted today: “We have great respect for Cadbury's brands, heritage and people. We believe they will thrive as part of Kraft Foods.”
Reader views (58)
Dont buy Cadburys goods, I hope Mr Krafty chokes on the stuff, especially after our Governments Bank RBS hleped them buy it ,so as to put all our workers out of a job at Somerdale. I will be officially ceremoniously burning my last bar of Cadburys later today ... photo to be put on website.
They say we cant boycott it , but I think we can ! Power to the people
Yours A born again chocoholic. !!
- Martyn Williams, Forest of Dean Gloucestershire, 10/02/2010 10:39
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It is defined as a hostile takeover because when the owners of the company continued to refuse the deal Kraft went straight to the shareholders, meaning that the owners have no say. So yes, actually, it IS hostile.
This is so pathetic; I can't believe it's been allowed to happen. I'm sure they won't change the product, but everyone knows their promise of keeping the manufacturing of Cadburys in England won't last - they promised the same thing when they took over Terry's, and then immediately moved manufacturing to Poland. Which, of course, means even more unemployment in an already suffering part of Britain.
Boycott, anyone? Not that it'll make much difference...
- Florence Benham, Shepperton, England, 23/01/2010 23:02
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Mozzy, fareham, hants "if we don't act soon all the iconic british brands we grew up with, like cadburys or kellogs, will be gone." ????!!!!
I think you will find Kellog's is (and always was an American) company. Proof enough that most of this outrage is routed in ignorance and silly anti-Americanism (why are you all so wound up about a damned chocolate manufacturer !?
- Jason Stone, Stratford, Newham, 21/01/2010 14:43
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The take-over of Cadbury's is just another nail in the British coffin, how can we allow this to happen.
The law should disallow foreigners being a majority share holder in a British company, America wouldn't stand for it!
I am very disappointed and feel for those who work for the company. My family went to Cadbury World for my Grandson's birthday, we had a wonderful time thanks to the loyal staff.
- Pat Eyton, Wolverhampton. UK, 20/01/2010 19:19
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kraft have taken away an iconic piece of britain, i, for one, will never touch another of their's or cadbury's products. shame on the former cadbury owners for killing a piece of britain. if we let them get away with this it will never stop,if we don't act soon all the iconic british brands we grew up with, like cadburys or kellogs, will be gone. i say we stand up now, it's too late for cadburys but we can make sure it doesn't happen again. i would like to see a national boycott of all kraft products.
- Mozzy, fareham, hants, 20/01/2010 16:01
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Good Lord -I have never read or heard so much whining, hand wringing and silly knee-jerk anti-Americanism as I have in response to this story. It's a chocolate manufacturer not the Crown Jewels or Buckingham Palace !
Nobody forces you to buy their products and no-one forced them to accept this offer ! Buy it don't buy, choice is yours. My perception of this deal from what I have heard is that Cadbury shareholders have completely stitched up Kraft...very few of the people on here whining about something of so little real consequence would turn down an offer like that especially when the economy is as weak as it is.
Wal-Mart bought ASDA years ago and they seem to be doing just fine, if not better than fine.
Really aren't there worse things to worry about ?
- Jason Stone, Stratford, Newham, 20/01/2010 14:01
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It's not as if Cadbury's horrible "chocolate" could get much worse...
- Roy, England, 20/01/2010 13:45
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R.I.P Cadburys its all over now,the boycott starts here.
- Jacob, Brown damaged Britain, 20/01/2010 13:02
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As a consumer of Cadbury products I read with sadness that Kraft have finally managed to buy the brand. As a child I remember Terry's Chocolate of York was highly regarded for the superior Chocolate they produced. All this changed when Kraft bought the company. Products such as Terry's Chocolate Orange are still with us, but in my opinion the quality has degraded considerably under Kraft foods.
Will we see the same with Cadbury?
Time will tell, but Kraft need to do a lot to win my trust.
- C Lee, Beverley, Yorkshire, 20/01/2010 12:45
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My 480 shares in Cadbury (that I have held for many years) will be voting against this takeover.
- Mark, London, 20/01/2010 12:22
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The Cadbury family should stop moaning, they sold the business and have no right to comment.
Best of luck to the workers who I do feel sorry for though.
- P Staker, London, 20/01/2010 12:07
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M Wood: "A Key factor that enabled this takeover is the devaluation of the Pound, which has been caused by this Governments financial mis-management?" - a year ago the pound : US dollar rate was 1.40, now it's 1.63 - IOW for the same sterling price Kraft are paying 16% more than they could have done a year ago.
- Tonyb, Melbourne, Australia, 20/01/2010 11:37
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Yet another brand that I won't buy, but this is the inevitable consequence of our worship of 'bigger is better' and material wealth and celebrity. The bigger and wealthier a body (businesses, schools, hospitals etc) the further they get from their market/ clients/ patients and their purpose, and cease to be a positive force and a become a dead weight on society. Schumacher was right, small IS beautiful - and less likely to have a devastating effect when corrupted.
- Michele Nicholls, Gloucestershire, UK, 20/01/2010 11:32
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Hmmm, plastic chocolate coming soon! Thanks, but no thanks. I'll stick to something tastier.
- ..Take 'Em & They Cover Them In......Plastic,, London, 20/01/2010 11:17
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The average cocoa content of US 'chocolate' is 11% (below 10% they can't call it chocolate). Most Cadbury's chocolate has 22% cocoa solids, so is not a great deal better. I shall miss Green & Blacks (who Cadbury bought a little while back), the rest is pretty average at best.
- Paul, London, 20/01/2010 10:21
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Boycott all Kraft products.
- Frank, Home Counties, England., 20/01/2010 09:39
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Not shocked at the buyout....It has been coming for months. We thought Hershey's would pony up and buy the company when the first Kraft offers fell through.
I don't know why any shareholders from Cadbury should complain, 12 billion pounds is nothing to sneeze at!
- K.D., Lemonville, Texas USA, 20/01/2010 07:03
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Big Surprise! Another British Icon sold out! Just Like; BOC Gas, P&O, ICI, Landrover, the list goes on. But who wins? Greedy Bankers & Corporate Fat Cats! Shame on you Poms!
- David F, Melbourne, AUS, 20/01/2010 04:51
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Another humiliating defeat for Britain. You guys should just pack it in. Face it, you're the Haiti of the North Atlantic.
- Sean, USA, 20/01/2010 02:54
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I cannot help but feel the USA CEO Todd Stitzer of Cadbury, looked after himself £7million and the USA Kraft, but not the UK shareholders of Cadbury or workers. Will Mr. Stitzer end up on the Kraft Board or supporting bank? Like many readers, I think consumers' will move away from Cadbury products as Kraft ends Fair Trade etc. I can see the divorce before this starts.
- Andrew, London, 20/01/2010 01:14
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I am so disgusted and angry by the sale of cadbury I could not help but voice my opinion online (1st time ever). As an expat living abroad I spend $100s a year buying british chocolate imported from the UK, most is cadbury. But now I am going to go cold turkey and BOYCOTT all Cadbury and Kraft produts and am going to make it my business to encourage others to do the same. Gosh 186 years of Britishness wasted.What next UNITED KINGDOM FOR SALE. WORLD UNITE AND BOYCOTT CADBURY/KRAFT PRODUCTS.
- Kathryn Holmes, Auckland, NZ, 20/01/2010 00:04
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Common culture and cultural icon - gone because of the company being part of the share-owning culture. To float is to say sayonara sometime down the road. Iceland is back in private hands after a spell on the exchange. England without Cadbury's choco even though it IS just chocolate-flavoured sugar isn't England any more.
- Tallulah, Hove, UK, 19/01/2010 22:42
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I am incenced by the actions of Kraft and the lack of
commitment by the British government to defend this wholly British institution from this hostil foreign takeover bid.We the British are the laughing stock of the world to allow all our major companies to be taken over by the world.Kraft did the same to Terrys of York and then after a few years closed the York factory
Lets hope the shareholders see sence, and block this deal.
If it goes ahead I for one with never and I mean never will buy Kraft or Cadbury products.
- Robert Hill, Baldock Herts, 19/01/2010 21:36
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As a yank I'm very disappointed in this as well. I don't understand this desire of our mediocre brands to lower quality standards throughout the world.
- Jake Mueller, Denver, US, 19/01/2010 21:11
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Unfortunately, Kraft is not buying Cadbury for their gain in the British market.Cadbury is being bought because they have a very large market share in emerging markets. I would go as far as to say that,they are willing to even pull out of the British market & don't care one bit what the British people thinks.The govt of Gordon Brown is as dishonest as usual.To now be saying that british jobs would be protected is just simply dishonest - because the whole market knows that this deal was going to be done using debt instruments & to mollify people, they raised the cash part of the deal just slightly.If you take-over another company using debt instruments - corporate bonds issuance etc etc,your shareholders & other investors would immediately like to see your debt burden reduced after the deal is passed, because the merged company would hold so much debt.One way to reduce debt burdens is to reduce payroll burden.All these information is available in the market place just as any other merger/takeover deals are.So this deal would surely result in huge job losses. So for the govt to now act as surprised and putting out a statement to say jobs must be protected is simply dishonest as they're only looking out for their electoral prospects and couldn't care less about the people that are about to loose their jobs in the coming months - This is Labour for you - this is what they do & as usual, they always regard the people as too foolish to realize what this is.
- Brenden, NY(expat), 19/01/2010 19:48
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I too sold good British chocolate long ago in the Canadian Eaton stores. It was the best chocolate and will be saddly missed. We here having been feed american garbage chocolate at the courner store. I agree that the US grabbes anything it gets it hands on and reduces it to its lowest cheapest factor. Here in Canada we have lost our manufacturing and most natural resources to the south. Not for the betterment of Canadian jobs or Caanadian markets either. We canadians say even less on the Big Brother south of us. Canada the Northern United States- saddly done by our own greed.
- Denise, Oshawa ON, Canada, 19/01/2010 19:31
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What world-known British brands are left? I can't think of one. And with them has gone the British character.
- Phil Jones, London EU, 19/01/2010 18:33
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Another British Brand to be torn apart ... like most British Company's which have dominated its industry gets taken over because the shareholders want to take their money and run ... what about what they left behind, real lives, real people and real hard work of the those who help make what Cadburys are ... Im not just directing this to Cadburys, its to most of the British Industry in any market ... a overseas company comes over and does a take over because they need our market share ... shame they alway 9 out of 10 strip out the good infrastructure and think their system is always better and bring in their workers from their own countries to take the top jobs! yeah Cadburys did enjoy the funds from floating the company, but lets get real, the only people who get hurt here are the ordinary workers who will now be know as a number. Despite how people see if, no matter how many workers gathered money together to buy the shares to avoid a takeover, they wouldnt have been able to compete with the likes of Krafts they just wouldnt have had the funds like that to make it effective!! Good Luck to the Cadbury workers!!! Hope Krafts dont live up to their name of being asset strippers!!
- Amy, london, 19/01/2010 17:58
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So it's one rule for the Cadbury family, another for everyone else. It was ok for them to sell their company to the stock market, and take a healthy profit, but the Cadbury shareholders and board are not allowed to do the same thing. It is because of this failure to take responsibility for one's own actions that we are now underwriting major UK banks to the tune of trillions of pounds.
- Sg, London, 19/01/2010 17:44
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At the price paid, this deal was all about egos rather than cementing corporate synergies at a sensible price. Rosenfeld had painted herself into a corner. Having forced her way in she will now have to deliver on her extravegance. The massive debt that this acquisition will create has got to be serviced and paid down. Plants and jobs will be sacrified to meet the necessary targets. And we all know whose job will be in Warren Buffett's rifle sights if a decent return on investment fails to materialise.
- Stephen, North London, 19/01/2010 17:34
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>>The takeover will create the world's largest confectionery company but means that there are no more major British owned sweet and chocolate makers.
I assume then the deal will be referred to the MMC?
And once they have investigated, it will be blocked?
- Adam, London, 19/01/2010 17:31
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When Terrys sold out I stopped buying their products, now I'll have to stop buying any Cadbury products. This country is now so weak that it seems we can't even run a chocolate company.
- Jon Kent, Hertford. UK, 19/01/2010 17:29
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oh well, what a shame. just another brand of my shopping list. if this goes on at that speed, I am starving soon.
- Michael, Cheshunt, 19/01/2010 17:25
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Let's be clear, it was the Cadbury family that sold out. OK, they didn't know how far that might go. And now they do. Good luck to Bournville residents and loyal staff.
- Steve, London, England, 19/01/2010 17:24
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Don't worry folks, I work in Norway where Freia chocolate is owned by Kraft, it is far superior in quality and taste to Cadbury's dairy milk and even better than Suchards in my opinion!
- Russell Johns, London, UK, 19/01/2010 17:22
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Seems strange to describe this as a “hostile takeover” in the lead-in when the story itself notes that the Cadbury board accepted the offer and considers it good value. That is pretty much the definition of the opposite of a hostile takeover. That some shareholders don’t like the deal does not make it a hostile takeover.
In any event, whenever I want chocolate I always seek out a Cadbury as it seemed to me pretty superior. If the warnings in this story come true I guess I will cut down on the habit. Certainly Kraft cheese is horrible - I do not like it in my fridge let alone ever consider eating it. Who knows, maybe the chocolate quality will stay intact after all - it may very well be that 46,000 global employees are not necessary to maintain the existing quality of the chocolate. After all this is a chocolate-making concern looking to make money and answerable to its shareholders, not a social program.
Those slamming the deal mention the potential loss of jobs but I wonder what those folks think a good price for these particular shares would have been as compared to the per share price that was accepted here. I am guessing most never even thought about it.
Meanwhile the story refers to a member of “the Friends of Cadbury social networking site” - that one made me laugh out loud.
- Rich, New York City, New York, 19/01/2010 17:16
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And so it goes on: another British institution sold to the highest corporate bidder who we slash and burn it's assets. Why? Because these people have no passion or drive for the product they are producing and selling. To paraphrase Wilde these people know "the price of everything and the value of nothing."
- John David, London, 19/01/2010 16:47
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First plastic cheese and soon plastic chocolate. This is the end of the Cadbury brand as we knew it.Kraft is an asset stripper and Rosenfeld is only out for her own self glorification in the corporate world. They will struggle to pay down the debt with massive job cuts, but why would she care? American chocolate is vile so they will probably standardise the recipe to save money, The British people should henceforth boycott Kraft/Cadbury products and in the end we may well buy back the brand at a bargain.
- Neil, London, UK, 19/01/2010 16:05
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This could be the catalyst that ignites civil unrest and rioting in Mayfair,but then again so much of our beloved Britain has either been sold off or destroyed in the last twenty years that a bar of chocolate is neither here nor there,anyway a lot of their stuff is produced in the republic of Ireland at present,which to my knowledge is not in Britain!,"top 'o' the morning to yer".
- Jacob Kimberley, Brown sticky Britain., 19/01/2010 15:51
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Brits sell everything and then wonder why there are no jobs left in Britain, Kraft will move the factory its just time, Terry's have already moved to Poland, cheap labour....
- Fred, London, 19/01/2010 15:41
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If Cadbury cared about the ownership of the company, they would have kept it themselves instead of selling it to the market. The shareholders - not the Cadbury family - own the business and can dispose of it as they think fit.
- Neil, People'S Republic Of Europe (Formerly England), London UK, 19/01/2010 15:22
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More British industry being bought up and transferred overseas. And the government wonder why the economy is up a smelly creek without a paddle.
- Nobby Clark, Perth, the Scottish one, 19/01/2010 15:08
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The quality of Cadbury's products is pretty bad. In fact the EU wanted to forbid Cadbury's using the word chocolate as the cocoa content is so low.
I hope Kraft don't change the Green & Blacks part of it though. That really is scrummy.
- Nick, London, 19/01/2010 15:07
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Asset stripping,nothing new here then,I onced worked at the Triang Toy factory,in South London,boughtout by an American Company,in less than one month it was raised to the ground,workers sacked,and the site sold for development,at five times the figure paid for it,Cadbury workforce,WATCH OUT.
- Terrence, London, 19/01/2010 14:53
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i've heard tell that a combination of chocolate and cheese can contribute towards a major migraine.
- M.O'Brien, london.uk, 19/01/2010 14:31
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Another consequence of 'globalisation' which overrides individual ethics or concerns, forcing us all into complicity in actions we may disapprove of. Kraft want Cadburys to access emerging countries. They see Cadbury 'candy' products as ideal for this. But, the financial price is high, Kraft has probably borrowed heavily and will need to repay quickly. Will this affect Cadbury UK employees? Kraft have few,if any,of the social initiatives Cadburys has long practiced. The takeover is ironic; Cadbury's was founded by practicing Quakers and their ethos has, more or less, survived until now. Cadburys, Fry and Rowntree brands were all UK chocolate brands, all founded by Quakers and all generated significant advances for their workers and suppliers. They demonstrate that a humane and ethical approach also created significant corporate and personal profit and tax income for the country. These three brands are no longer independent entities, can their voluntary ethical approach work again.
- Helen, norwich, 19/01/2010 14:22
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I won't be buying Cadbury's again. Choc fans, vote with your purse and boycott the greedy cheesers
- Charlotte Lews - London, London, UK, 19/01/2010 14:22
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The board of Cadbury should simply leave and start a new business with the money they have made. Having tasted Hershey's I'd be inclined to eat my own feet rather than have to repeat the experience.
- Bob, Cheam, 19/01/2010 14:13
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The size and quality has been dropping since the manufacture was transferred to Eastern Europe and I have stopped buying it. Have a feeling this will be the end of the brand through consumer rejection.
- Paul B, London, 19/01/2010 14:12
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The Cadbury family should not have allowed themselves to become minority shareholders and loose control. Public companies are just that and everyone can own a piece.
RIP Cadbury
- Steve, London, 19/01/2010 14:12
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Oh what a shame another british institution being engulfed and devoured by the Americans, hell bent on impriving their economy at the expense of everybody else. You only have to look to Haiti, American generosity or another means of getting their fingers into infrastructure projects to improve the finances of their own people.
The Americans only look after their own. Cadbury will be made in the former soviets in excghnage for more infrastructure contracts and our UK workforce will be made redundent. The product will taste different and the buyers will look elsewhere.
Next target must be Thorntons, but it is their golden opportunity to move into the Cadbury gap that will be created by the inferior product and the wholesale rejection by the British people of a product taken over by corporate Americans, we only need to see how Quality Street deteriated after it left British ownership. Thorntons could move into the Biscuit and Chocolate market, as well as some of the other areas. The problem is that Nestle are 'probably' interested in them for their outlets and brand name.
More British business to the wall, the nation will be a ghetto soon, incapable of maintaing any true manufacturing base.
- Rupert, Canary Wharf, 19/01/2010 14:09
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Kraft? Yuck! Time to switch brands!
- John Bull, Londonistan, UK, 19/01/2010 13:58
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The family cannot have it both ways. They made the company public and therefore reaped the benefits at that time. That is business. It is now up to the directors and shareholders not the cadbury family sentimental value.
- Michael Leighton, Maidenhead Berkshire UK, 19/01/2010 13:45
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There are no surprises here. If people, including family members, wanted Cadbury to remain independent they need to put their money where they mouth is. If the family owned enough shares to control the company their desires would actually matter. One share, one vote. Democratic process where the majority decides the outcome. If the family have sold their shares and taken the money in years gone buy, they no longer get to vote.
The Cadbury board said it would take an offer over 800 pence to bring the company to the table. Kraft paid up and the board agreed a merger.
- John Corey, London, 19/01/2010 13:41
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Ersatz cheese takes over a part of my childhood.
- Derek, London, London, 19/01/2010 13:15
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As much as plastic cheese and waxy chocolate is what you can expect from Kraft there is little we can do about it...
..except to avoid some of favourite products when the 'quality' drops.
The shareholders are happy with the deal as are the directors of Cadbury. The halcyon days are over. Steel plant closing in Redcar? Longbridge closing in the West Midlands? Call centres in the Far East. Its the world we live in...
Its the nature of 'progress' which is a polite way of saying asset stripping - taking a company to obtain brand name and market penetration in certain markets.
- Neilhead, Cross of Clay, Derbyshire, 19/01/2010 13:06
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A Key factor that enabled this takeover is the devaluation of the Pound, which has been caused by this Governments financial mis-management?
Brown was all too happy to sit back and enjoy the asset bubble caused by the rising house prices and increases in personal debt.
- M Wood, somerset uk, 19/01/2010 12:59
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It's not a hostile takeover, it's a recommended offer. I do however look forward to this deal ending in expensive acrimony, and fail like the majority of takeovers do.
- John Thomas, Baise-sur-Coq, France, 19/01/2010 12:59
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Morning:
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