Fury over Kraft u-turn on Cadbury plant closure

By Jane Byrne

- Last updated on GMT

Related tags: Irene rosenfeld, Kraft foods, Cadbury

Kraft Foods’s reneging on a decision to keep a Cadbury factory near Bristol in the UK open will result in the loss of 400 jobs and has drawn criticism from politicians and unions alike.

The US group yesterday confirmed that they would be closing the Sommerdale plant in 2011. The facility, which makes Crunchie and Curly Wurly bars, was to be shut by Cadbury but Kraft, following its takeover of the UK confectioner, had pledged to keep it open.

Lord Mandelson, the UK Business Secretary, who met Kraft CEO Irene Rosenfeld last week to seek reassurances on Cadbury's future under its new owners, said that he was disappointed with the decision and that the CEO, who would have known of the closure last week, had not indicated that such a move was imminent.

Kraft said in a statement that after extensive talks with senior management at Cadbury, it has reluctantly accepted that the factory will have to shut. "While this is a difficult decision, we have moved quickly to end any further uncertainty,” ​said the US food giant.

The group said that Cadbury had already spent £100m (€113.6m) building new facilities in Poland and most production would be transferred by the middle of this year.

Rosenfeld added the planned £30m (€34.10) investment plans for the Bournville site remained in place, and that the company will honour Cadbury's previous undertakings to Somerdale employees concerning the terms and conditions of the closure.

UK workers’ union Unite is demanding that Kraft comes clean on its plans for the entire Cadbury workforce.

Jennie Formby, the Unite national officer for food and drink, said that promises were made to the Somerdale workers which “appear now to have been a cynical attempt to curry favour with the British public during what was an extremely unwelcome and unpopular takeover.”

Meanwhile, outgoing Cadbury chairman Roger Carr claims that a huge part of the blame for the sale of the UK confectioner to Kraft can be laid at the door of hedge funds.

According to a report in The Times, Carr told Oxford University’s Saïd Business School that hedge funds – which held a 30 per cent stake in Cadbury – wielded too much influence in hostile takeover bids.

And he said approval by 60 per cent of shareholders should be required for a bid to be successful as opposed to the current benchmark of 50.1 per cent.

Carr last week confirmed that he would be stepping down as Cadbury chair on the heels of the takeover by Kraft Foods, alongside departing chief executive Todd Stitzer.

Related topics: Manufacturers, Mondelez International

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