LONDON (AP) -- The British agency which regulates business takeovers on Wednesday criticized U.S. food company Kraft Inc. for promising to keep a Cadbury factory open, then changing its mind after taking control of the British chocolate company.
The Takeover Panel Executive said Kraft did not have a reasonable basis to believe that it could keep the Somerdale plant near Keynsham in southwestern England going, and should not have made the promise.
Kraft said it was pleased that the Takeover Panel concluded that the company acted in good faith, and said it would not appeal the decision.
Kraft, based in Northfield, Illinois, paid $17.5 billion to gain control of Cadbury.
Cadbury announced in 2007 that it intended to close the factory in 2009 and 2010, and move production in Poland.
When Kraft announced in September that it was considering making an offer for Cadbury, it said it believe it could keep the plant open -- a statement repeated several times in subsequent months. The Kraft decision to close the plant only increased resentment of the deal in Britain, where some were dismayed to see a British corporate icon sold into foreign hands.
"Kraft should not have made the statements in the form in which it did in circumstances where it did not know the details of Cadbury's phased closure of Somerdale and its investment in plant and machinery to make products for the U.K. in its new facilities in Poland," the panel said.
"Without this information, Kraft's belief, no matter how well-intentioned, that it could continue to operate the Somerdale facility on a commercial basis was, in the opinion of the Executive, not a belief which Kraft had a reasonable basis for holding."
Kraft could have rolled back from the commitment in January when it was informed that the factory closure was well advanced, funds had been committed and equipment and staff were being moved out.
"However, Kraft did not take this opportunity to seek further information from Cadbury in order to establish whether the closure was so far advanced that it was unrealistic to reverse it."
At the same time Wednesday, the panel announced that Peter Kiernan has withdrawn as a candidate to become director general of the agency. Kiernan, a senior figure at Lazard & Co., Ltd., advised Kraft during the takeover bid.
The Takeover Panel said Lazard had discussed the factory closure issue with Kraft and made some inquiries, "took comfort from Kraft's own expert operational knowledge in relation to factory closure programs in the industry."
However, it said Lazard's conduct was not sufficient to merit public criticism.
Kraft Executive Vice President Marc Firestone said the company regretted that it had not been possible to keep the plant open.
"Even though we never made a promise or a commitment to keep the facility open, we recognize that our 'statement of belief' created uncertainty among Somerdale employees," Firestone said in a statement.
"We have decided to accept publication of the Panel's decision rather than proceed to an administrative appeal.
"We believe it's best for everyone to put this matter behind us so we can focus our energy on doing what's most important now: Growing our combined business in the U.K. and working with others to redevelop the Somerdale site in a way that helps Keynsham continue to thrive."
