Kraft's broken promise slammed

FOOD giant Kraft was censured by the City's takeover watchdog yesterday for breaking a pledge to keep open a Cadbury factory.

The US firm made the promise in offer documents for the British chocolate maker, only to announce after completing the takeover that it would close the factory at Somerdale near Bristol, with the loss of 400 jobs. The Takeover Panel issued a statement of public criticism after it found the company had not met standards required under a City's code.

The ruling has scuppered plans by the panel to appoint senior Lazard dealmaker Peter Kiernan as director-general. His firm was lead financial adviser to Kraft and was responsible for advising it on the takeover code.

The panel said Lazard should have put pressure on the US group to explain the basis of its belief on the factory plan. Philip Remnant will continue as the panel's director-general after Kiernan withdrew his candidacy.

Kraft's conduct in the 10 billion takeover battle had previously been criticised by the business select committee, which urged the government to monitor the firm's other undertakings such as pledges of no redundancies for two years.

The Takeover Panel said it accepted that Kraft held an "honest and genuine" belief that it could keep Somerdale operational.

However, it added that it should not have made the statement when it did not know the details of Cadbury's planned closure of Somerdale and its investment in plant and machinery to make products for the UK in its new facilities in Poland.