Roger Carr Blames Takeover Rules For Cadbury’s (CBY) Acquisition

Roger Carr, the chairman of Cadbury (ADR) (NYSE: CBY), has come down heavily on the takeover rules that allowed the acquisition of Cadbury by Kraft Foods Inc. (NYSE: KFT).

After months of defending itself against a hostile bid by Kraft, Cadbury finally agreed to be acquired at 850 pence a share. Carr believes that he achieved the highest possible price for the company. Carr said that no one could have fought for the company more than he did and that the decision to sell was the most difficult decision he had ever made.

Carr believes that the UK takeover rules require major overhauling and the issue should be at the top of the Government’s corporate agenda. He thinks that Cadbury was always at a disadvantage in the fight against the hostile bid as 50% of the company was held by US institutions as against the 28% stake held by long term British investors. There were other factors such as a salmonella infection, an assault by American investor Nelson Peltz and nonperformance, to name a few, that led to British investors not buying the stock.

As the Kraft bid gained momentum, the proportion of British investors shrank even further as they booked profits from the rising share price allowing hedge funds to have a larger stake in the company than long term British funds. Carr believes that there should be changes made to takeover rules that would raise the bar for the bidders and also discourage hedge funds from taking positions as there would be uncertainty about making profits from the deal. Carr believes that it is now up to the UK government if it wants to declare some companies in the country as strategic assets to prevent them from future hostile takeovers.