M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

Wednesday, April 7, 2010

Parliamentary Report on Cadbury Acquisition

The UK Parliament's Committee on Business Innovation and Skills has just released its report on Kraft's acquisition of Cadbury (here).  The report criticizes Kraft for what it calls Kraft's "cynical ploy" in promising to keep UK manufacturing facilities during the bidding and then immediately announcing their closure upon completion of the deal.  The report also laments the reported role of institutional (or short-term) investors in deciding the outcome of the contested sale and makes a number of recommendations in line with Lord Mandelson's earlier recommendations.,  These include: 

• Raising the voting threshold for securing a change of ownership to two-thirds;

• Lowering the requirement of disclosure of share ownership during a bid from 1% to 0.5% so companies can see who is building stakes on the register;

• Giving bidders less time to “put up or shut up” so that the phoney takeover war ends more quickly and properly evidenced bids must be tabled;

• Requiring bidders to set out publicly how they intend to finance their bids not just on day one, but over the long term, and their plans for the acquired company, including details of how they intend to make cost savings;

• Requiring greater transparency on advisors’ fees and incentives; and 

• Requiring all companies making significant bids in this country to put their plans to their own shareholders for scrutiny.

The Takeover Panel's consultation on reform of its rules is expected to be completed on May 21, 2010.



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