The FINANCIAL — U.K. regulators are investigating Kraft Foods on whether the company misled employees and investors in its battle to take over British firm Cadbury, the Wall Street Journal said, citing people familiar with the matter.
The Panel on Takeovers and Mergers is looking into comments Kraft executives made during the contentious takeover battle about Cadbury's Somerdale candy factory in Keynsham, the same source reports. Beginning with its initial takeover letter, Kraft officials repeatedly said they believed the factory could be kept open. That was a contrast to Cadbury, which had said it would close the plant and move Somerdale's 500 jobs to Poland.
The Wall Street Journal said Kraft executives will be called later in March to give evidence in front of a parliamentary committee that is holding hearings on the takeover, Reuters informs.
Both Kraft and the takeover panel declined to comment on the report, according to BBC. Cadbury, which was bought for £11.5bn, had already planned to shut the plant.
Kraft's decision to close the Somerdale factory in Keynsham, near Bristol drew criticism from workers and Business Secretary Lord Mandelson, the same source reports. Last month, it emerged that MPs were to question senior officials from Kraft over its takeover of Cadbury.
This week, the panel wrote to Jacob Rees-Mogg, the Conservative Party candidate for the area where Somerdale is based, to say that it is looking at the accusations, a representative for Rees-Mogg said Friday, according to The Wall Street Journal. Rees-Mogg had written in a Feb. 15 letter to the panel that Kraft, in backtracking on the closure, broke rules that call for bidders to "prepare statements with the highest degree of care and accuracy" and not to make statements that "while not factually inaccurate may be misleading."
The same source reports that a spokesman for Kraft said in a statement, "Throughout the transaction, it has never been our policy to comment on the U.K. takeover panel. Any questions about the panel therefore should be addressed to the panel itself." On Friday, Rees-Mogg described Kraft's behavior as "shameful."
Kraft completed its takeover of the UK chocolate maker on 2 February, according to BBC. Plans to close the Keynsham plant, with the loss of 400 jobs, were originally announced by Cadbury in 2007 as it looked to move production to Poland.
The same source reports that before its bid was accepted, Kraft told the BBC: "We believe we would be in a position to keep the Somerdale plant operating and we are sincere about that." However, it said later that it had only become aware of how advanced plans were for the new Poland factory after the takeover deal had been agreed.