Not Everyone Pleased with Cadbury Surrender

Last Updated Jan 21, 2010 11:09 AM EST

Cadbury (CBY) and Kraft (KFT) have become friends again after Kraft raised its offer for the UK company and Cadbury stopped fighting what had been a hostile takeover attempt. But not everyone is happy about the move, for a variety of reasons.

Value "I think it's a bad deal," said Warren Buffet, whose investment group, Berkshire Hathaway, holds 9.4 percent of Kraft. "I feel poorer." Buffet had long warned against overpaying for Cadbury, and on the current deal, he said, "If I had the chance to vote on this, I'd vote no."

Jobs There's a lot of concern in the UK that Cadbury jobs will be lost under Kraft ownership, especially since Kraft wound up taking on more debt than anticipated so it could offer more in cash rather than stock. A reporter visiting the Cadbury factory in Bournville reported, "It felt a little bit like a death in the family," and even Cadbury chair Roger Carr admitted job cuts were an "inevitability."
Even worse, it turns out that the Royal Bank of Scotland, which is 84 percent taxpayer-owned, is providing funding for the takeover. "When British taxpayers bailed out the banks, they would never have believed that their money would now be used to put British people out of work," said Liberal Democrat leader Nick Clegg. "Isn't that just plain wrong?"

Taste Brits and Americans have very different preferences when it comes to chocolate, and some fear that Kraft will make unwanted changes. In reality, though, it seems unlikely Kraft would be foolish enough to mess with the formula of Cadbury products within the UK, given how successful those products have been.

Hershey The Wall Street Journal points out that Hershey now becomes the little fish in a sea of "confectionary behemoths," i.e. Mars Inc. and the new Kraft-Cadbury entity, and that could make growth more difficult for the smaller company.

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