Sweet and sour

One thing that stands out for me in all the coverage of the Kraft takeover of Cadbury is what I see as the startling lack of ambition of the Cadbury senior leadership. Admittedly my view is UK centric, being largely informed by reports from the BBC and Financial Times. The FT is neutral in its reporting of this acquisition and yesterday’s (20th January 2010) leader is broadly supportive of the “… the UK’s openness to overseas bidders.” I am in agreement with that sentiment. On the other hand the FT’s front page headline, “Cadbury defends sell-out” is not without questioning overtones and it sits above an image of Kraft’s chief executive, Irene Rosenfeld who is smiling broadly, which suggests that Kraft are pleased with what they have achieved.

There is a section on the FT website devoted to this takeover; it includes a video interview with Roger Carr, the Cadbury chairman in which he defends the deal, and as with the headline, those words used to describe the interview are interesting in themselves. Perhaps I am reading too much into them. The interview is revealing as much for what is not said. While there is reference to achieving shareholder value, to the derisory nature of the initial offer and to the viability of an independent Cadbury, there was no indication that the senior leadership team had the stomach for continuing to lead an independent Cadbury and achieve better value for all their stakeholders than they eventually negotiated with Kraft. That is a depressing admission and calls into question whether an eventual sale was always the objective once Cadbury’s former drinks business had been split off, an option that has been the subject of press comment for some time.

In general I don’t have too many hang-ups about business ownership but I do think that something of value will be lost in this transaction. For one thing, the intangible experience of working for a company called Cadbury will soon be a thing of the past and that may matter to a significant number of people. It is an irony that many of them may well have ‘gone the extra mile’ in helping Cadbury achieve the good trading figures that sustained the company’s defence during the takeover bid. Also the confectionery world will almost inevitably become a less diverse place. No doubt the brands will remain but I will be surprised if the character of the products does not become less distinctive over time.

So why has this happened? It would seem that £8.50 per share was a more potent representation of the Cadbury leadership’s vision than a viable, global, independent confectionery business. At least in Cambridge (U.K.) we have Hotel Chocolat to fall back on for local consolation.