UK Regulators Will Force Kraft (KFT) Decision On Cadbury

Many American businesses believe that the UK and EU over-regulate the activities of companies based in those regions. Antitrust laws have been described as particularly overbearing.

The times does come, once in a while, when American companies are actually forced to make decisions about their business interests based on the regulations on the other side of the Atlantic and Kraft (KFT) is up against one of those now.

The U.K. Takeover Panel which keeps an eye on M&A activity in the country has given Kraft until November 9 to make a formal offer for Cadbury or end its fight to buy the company.

According to Bloomberg, “It was a sensible tactic from Cadbury to approach the Panel at this point,” said Martin Deboo, an analyst at Investec Securities in London. “Kraft’s intervention is genuinely disruptive to their day-to-day business.” More than that, it gives Cadbury a huge advantage in its game of cat-and-mouse with the US food company.

Kraft is considering its options for financing a takeover of Cadbury and there is no assurance that the capital can have that in place in six weeks. Kraft is also in the process of trying to convince some of Cadbury’s largest shareholders to pressure the British firm’s board to accept an offer. That process could take longer than six weeks as well.

The British regulators have conveniently made a decision that could allow Cadbury to stay independent, whether it is good for the company’s shareholders or not.

Douglas A. McIntyre