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Plain facts on chocolate era (From Cotswold Journal)
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Plain facts on chocolate era
10:20am Thursday 4th February 2010
I would like to respond with a few facts to Helen Donovan’s letter in last week’s Journal about the takeover of “British” company Cadbury, by the American food company Kraft.
The current ownership of Cadbury is not British, the largest single shareholder is Franklin Mutual, an American business.
The current management of Cadbury is not British, the CEO is Todd Stitzer an American, educated at Harvard.
Cadbury employees 8700 people in North America compared to just 5700 in Britain & Ireland and 45,000 worldwide.
Over three quarters of Cadbury sales are made outside the UK and Ireland.
With foreign owners, foreign management, 87 per cent foreign employees and 76 per cent foreign sales, the only sense that Cadbury can still be described as a “British company”, is that it was founded in Britain, and that’s one thing we can be sure won’t change when Kraft buy it!
James Hickman, Main Street, Elmley Castle.
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helen donovan, Evesham says...
1:50pm Thu 4 Feb 10
http://www.guardian.
co.uk/global/dan-rob
erts-on-business-blo
g/2010/jan/19/kraft-
cadbury-takeover
co.uk/global/dan-rob
erts-on-business-blo
g/2010/jan/19/kraft-
cadbury-takeover
OnLiberty, Elmley Castle says...
11:56am Wed 10 Feb 10
You say:
Franklin Mutual hold only 7% of Cadbury shares. They also hold Kraft shares. In fact the top ten Cadbury shareholders also just happen to be Kraft shareholders, which just goes to show that all that mattered in this outrageous hostile takeover was greed and money.
How does it show this ?
If the same people end up owning the business before and after the take-over, who is being greedy ?
Are the shareholders of Kraft greedily making money from the shareholders of cadbury, i.e. themselves ?
You Say:
and not what was best for Cadbury
Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!
If, as you seem to think, it has a life of its own then who is to decide what is in its best interest and on what criteria ?
Its entire reason for existence is to provide a return to the shareholders who have invested in it.
Surely it is up to the shareholders, the owners of Cadbury, to decide for themselves what is in their best interests.
You Say:
or its employees.
The employees don't own cadbury any more than a shop assistant owns a corner shop. They are paid a salary to do a job.
They are free to leave and go and work somewhere else and the company is free to make them redundant if they are no longer required.
Why should they have any say in what the owners of the business do with their property. Cadbury is not a workers co-operative it is a commercial enterprise.
You Say:
Yes, Cadburys downfall in part was due to allowing so many of their shares to pass into foreign hands
You assert that there has been a downfall (all that has happened is that the same bunch of shareholders own the assets through a different structure)
You conclude, without any justification, that the "downfall" was caused by allowing so many shares to fall into the hands of foreigners.
The FACT is that there is no evidence that companies with higher foreign shareholdings are more likely to be taken over.
You Say:
particularly the greedy hedge fund share holders who were only interested in making a quick buck
Why is it wrong to want to make a quick buck ? Is it better to make a slow buck ?
Would you rather you had to work twice as many hours for the same pay to avoid being accused of wanting a quick buck ?
If it is greedy to want to obtain as much as you can for your efforts then we are all greedy and that greed has driven the innovation and enterprise that has lifted man from the caves to the industrialised society we all enjoy today. Perhaps Greedy Cadbury should sell their chocolate bars at cost to avoid being greedy, or worse yet making a "quick buck"!
The hedge fund didn't obtain shares in Cadbury by stealing them, they purchased them from other shareholders who wanted to sell.
The hedge funds thought the price would go up, the shareholders who sold wanted cash now. (Perhaps they feared the price would go down)
What can possibly be wrong with a voluntary trade between consenting adults, good luck to the hedge funds they got it right!
You Say
but the fact the deal was a HOSTILE takeover
Firstly you need to ask, HOSTILE to whom ?
Hostile, simply means not supported by the board of directors, who are the employees of the shareholders.
Nobody forces the shareholders (Owners) to sell, it is a free choice on their part, so no takeover is actually HOSTILE to the company.
In this case the actual takeover was not HOSTILE, the board of directors recommended the final Kraft offer to the shareholders.
You Say
and the deal financed by a state owned bank using UK taxpayer cash (which you don't mention)
by an already hugely indebt American company, was what made it all so appalling.
If your point is that state owned banks should be careful not to lend to businesses that already carry too much debt, then I agree.
(I am not sure that Kraft's level of debt is unsustainable for a business of that size, but it is a debatable point)
If your point is that politicians should run the state banks to ensure that they make decisions on the basis of politics rather than economic criteria then I disagree. Politicians have repeatedly proved that even running a leisure attraction (Millenium Dome) or buying an IT system (NHS) or managing the construction a building (Scottish Parliament) is beyond their skill. The quickest way for the UK taxpayers to get their money back from the banks is to keep the politicians away from them.
You Say:
Cadbury was British for nearly 200 years and the Headquartes IS in Bournville.
Are you suggesting that any business with UK owners for an arbitrary period of time should be prevented from selling to foreigners?
Are you suggesting that any business with its headquarters in the UK should be prevented from selling to foreigners ?
What is it with all this Xenophobia ! Why should anybody other than the owner of a business have any say in who it is sold to ?
You Say:
but I wouldn't like to guess as to how much longer for, judging by what Kraft did to Terry's of York.
FACTS:
Kraft took over Terry's in 1993 and moved production to Eastern Europe in 2005, a whole 12 years later !
What UK company can guarantee it won't move production in the next 12 years ?
Cadbury itself was closing its Bristol plant to move production to a new £100M production facility in Poland before Kraft came along!
Franklin Mutual hold only 7% of Cadbury shares. They also hold Kraft shares. In fact the top ten Cadbury shareholders also just happen to be Kraft shareholders, which just goes to show that all that mattered in this outrageous hostile takeover was greed and money.
How does it show this ?
If the same people end up owning the business before and after the take-over, who is being greedy ?
Are the shareholders of Kraft greedily making money from the shareholders of cadbury, i.e. themselves ?
You Say:
and not what was best for Cadbury
Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!
If, as you seem to think, it has a life of its own then who is to decide what is in its best interest and on what criteria ?
Its entire reason for existence is to provide a return to the shareholders who have invested in it.
Surely it is up to the shareholders, the owners of Cadbury, to decide for themselves what is in their best interests.
You Say:
or its employees.
The employees don't own cadbury any more than a shop assistant owns a corner shop. They are paid a salary to do a job.
They are free to leave and go and work somewhere else and the company is free to make them redundant if they are no longer required.
Why should they have any say in what the owners of the business do with their property. Cadbury is not a workers co-operative it is a commercial enterprise.
You Say:
Yes, Cadburys downfall in part was due to allowing so many of their shares to pass into foreign hands
You assert that there has been a downfall (all that has happened is that the same bunch of shareholders own the assets through a different structure)
You conclude, without any justification, that the "downfall" was caused by allowing so many shares to fall into the hands of foreigners.
The FACT is that there is no evidence that companies with higher foreign shareholdings are more likely to be taken over.
You Say:
particularly the greedy hedge fund share holders who were only interested in making a quick buck
Why is it wrong to want to make a quick buck ? Is it better to make a slow buck ?
Would you rather you had to work twice as many hours for the same pay to avoid being accused of wanting a quick buck ?
If it is greedy to want to obtain as much as you can for your efforts then we are all greedy and that greed has driven the innovation and enterprise that has lifted man from the caves to the industrialised society we all enjoy today. Perhaps Greedy Cadbury should sell their chocolate bars at cost to avoid being greedy, or worse yet making a "quick buck"!
The hedge fund didn't obtain shares in Cadbury by stealing them, they purchased them from other shareholders who wanted to sell.
The hedge funds thought the price would go up, the shareholders who sold wanted cash now. (Perhaps they feared the price would go down)
What can possibly be wrong with a voluntary trade between consenting adults, good luck to the hedge funds they got it right!
You Say
but the fact the deal was a HOSTILE takeover
Firstly you need to ask, HOSTILE to whom ?
Hostile, simply means not supported by the board of directors, who are the employees of the shareholders.
Nobody forces the shareholders (Owners) to sell, it is a free choice on their part, so no takeover is actually HOSTILE to the company.
In this case the actual takeover was not HOSTILE, the board of directors recommended the final Kraft offer to the shareholders.
You Say
and the deal financed by a state owned bank using UK taxpayer cash (which you don't mention)
by an already hugely indebt American company, was what made it all so appalling.
If your point is that state owned banks should be careful not to lend to businesses that already carry too much debt, then I agree.
(I am not sure that Kraft's level of debt is unsustainable for a business of that size, but it is a debatable point)
If your point is that politicians should run the state banks to ensure that they make decisions on the basis of politics rather than economic criteria then I disagree. Politicians have repeatedly proved that even running a leisure attraction (Millenium Dome) or buying an IT system (NHS) or managing the construction a building (Scottish Parliament) is beyond their skill. The quickest way for the UK taxpayers to get their money back from the banks is to keep the politicians away from them.
You Say:
Cadbury was British for nearly 200 years and the Headquartes IS in Bournville.
Are you suggesting that any business with UK owners for an arbitrary period of time should be prevented from selling to foreigners?
Are you suggesting that any business with its headquarters in the UK should be prevented from selling to foreigners ?
What is it with all this Xenophobia ! Why should anybody other than the owner of a business have any say in who it is sold to ?
You Say:
but I wouldn't like to guess as to how much longer for, judging by what Kraft did to Terry's of York.
FACTS:
Kraft took over Terry's in 1993 and moved production to Eastern Europe in 2005, a whole 12 years later !
What UK company can guarantee it won't move production in the next 12 years ?
Cadbury itself was closing its Bristol plant to move production to a new £100M production facility in Poland before Kraft came along!
helen donovan, Evesham says...
1:22pm Wed 10 Feb 10
So you're from Elmley castle too. You're not James Hickman or a Kraft employee from Cheltenham HQ by any chance?
I'm afraid the people of Bournville, Birmingham and a lot of the UK don't see it your way.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
British companies are not protected from hostile takeovers in the same way that other countries are.
http://www.bbc.co.uk
/blogs/daveharvey/20
10/02/kraft_made_a_f
ool_of_us_say_ke.htm
l
http://www.dailymail
.co.uk/money/article
-1248059/How-Labour-
killed-Maggies-dream
-Britain-small-share
holders.html
I'm afraid the people of Bournville, Birmingham and a lot of the UK don't see it your way.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
British companies are not protected from hostile takeovers in the same way that other countries are.
http://www.bbc.co.uk
/blogs/daveharvey/20
10/02/kraft_made_a_f
ool_of_us_say_ke.htm
l
http://www.dailymail
.co.uk/money/article
-1248059/How-Labour-
killed-Maggies-dream
-Britain-small-share
holders.html
helen donovan, Evesham says...
1:33pm Wed 10 Feb 10
Oh, and Kraft should never have made promises they couldn't keep (or rather didn't have any intention of keeping).
http://news.bbc.co.u
k/1/hi/business/8507
066.stm
http://news.bbc.co.u
k/1/hi/business/8507
066.stm
OnLiberty, Elmley Castle says...
2:24pm Wed 10 Feb 10
I am James Hickman, I have no connection with Kraft and no shares in Cadbury.
I do however believe that statements need to be subject to scrutiny and argument and not accepted thoughtlessly, just because they are popular with the unthinking masses.
I admire your passion, (and your campaign to stop the government stealing charitable donations to hospitals) but your thinking on this issue is driven by misguided emotion, not rational argument.
You have not answered any of the points I raised.
The strength of an argument is not determined by the number of people who support it but by the facts and logic that underpin it.
If you are confident in your views then please attack my points, you may even change my mind.
If you have no answers to my points then you must surely change your mind or accept that your views are a form of faith and impervious to attacks by reason!
I would be glad to respond to your 2 new points, once you have dealt with mine.
I do however believe that statements need to be subject to scrutiny and argument and not accepted thoughtlessly, just because they are popular with the unthinking masses.
I admire your passion, (and your campaign to stop the government stealing charitable donations to hospitals) but your thinking on this issue is driven by misguided emotion, not rational argument.
You have not answered any of the points I raised.
The strength of an argument is not determined by the number of people who support it but by the facts and logic that underpin it.
If you are confident in your views then please attack my points, you may even change my mind.
If you have no answers to my points then you must surely change your mind or accept that your views are a form of faith and impervious to attacks by reason!
I would be glad to respond to your 2 new points, once you have dealt with mine.
helen donovan, Evesham says...
7:17pm Wed 10 Feb 10
"What is it with all this Xenophobia !"
I do not hate foreigners James, far from it, I just wish that our government protected our industries as well as other nationalities protect theirs.
Can you explain to me why Renault, BMW, GM etc have never been taken over by a foreign firm?
Why is it that they are able to protect their main industries, but we are not? How is it they do not fall victim to a hostile takeover?
"FACTS:
Kraft took over Terry's in 1993 and moved production to Eastern Europe in 2005, a whole 12 years later ! "
Yes, and over the 12 years they had it, they deliberately stripped it off its most profitable products and moved them elsewhere.
Then, when (not surprisingly) they could not justify leaving what was left to be produced in the Terrys factory, they went to great lengths to pretend to be looking for an alternative site, whilst all along knowing full well they were going to shut the lot and shift it all to Poland.
It is well documented.
"Firstly you need to ask, HOSTILE to whom ?
Hostile, simply means not supported by the board of directors, who are the employees of the shareholders.
Nobody forces the shareholders (Owners) to sell, it is a free choice on their part, so no takeover is actually HOSTILE to the company.
In this case the actual takeover was not HOSTILE, the board of directors recommended the final Kraft offer to the shareholders".
It was hostile in the respect that Cadbury did not want it. Cadbury Board of Directors fought it for months, they were left to defend themselves!
Cadbury was a profitable company - it did not need Kraft. It took several goes and many months for the takeover to go through.
The Board of Directors fought it off as long as they could. But unlike other countries (where the government step in), ours were apparently powerless to do so, because unlike our EU and American neighbours, ours waived their right of intervention some years back.
"If your point is that state owned banks should be careful not to lend to businesses that already carry too much debt, then I agree".
Yes it is. But I would add to that also that banks which are propped up with UK taxpayer money, should not be involved in supplying loans to heavily in-debt foreign companies to buy out British companies.
"Cadbury was British for nearly 200 years and the Headquartes IS in Bournville.
Are you suggesting that any business with UK owners for an arbitrary period of time should be prevented from selling to foreigners?
Are you suggesting that any business with its headquarters in the UK should be prevented from selling to foreigners ?"
What I'm saying is that our core industries and long established firms should have greater protection to foreign hostile takeovers than they do already. Cadbury was a sitting duck.
Look at Danone. A few years back Kraft tried to take them over, but the French government intervened, came up with a Danone law and Kraft were sent packing!
Look in Europe! They still have all their core industries owned by their own country. We don't even own our own energy supplies. How dangerous is that?!
"Why is it wrong to want to make a quick buck ? Is it better to make a slow buck ?
Would you rather you had to work twice as many hours for the same pay to avoid being accused of wanting a quick buck ?"
The hedge fund share holders do not care about or have any loyalty to the company they hold shares in. A hedge fund holder in the Cadbury takeover had exactly the same voting rights as long term loyal shareholders who had a genuine interest in the company. I object to that. Had the longterm shareholders had a bigger say (or vote) in the future of Cadbury, I suspect that the outcome would have been very different.
No, it is not wrong to want to make money, but to do it at the expense of the welfare of other people, and regardless of the consequences is very wrong. The hedge fund holders had too much say. I think that the amount of hedge funds available for sale should be limited to a percentage of the overall amount of shares (say 20%) and the long term shareholders given a bigger say in any takeover deal than shareholders who have recently purchased shares and who are only in it for a quick purchase / profit.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
"Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!"
Go and visit Bournville! The residents there will tell you very differently. Cadbury are the very centre of the community. They have provided swimming pools, community halls, theatres, built 800 homes for their workers.
They DID care about their workers - Cadbury was different!
"Its entire reason for existence is to provide a return to the shareholders who have invested in it".
Its entire reason for existence was to provide a decent standard of living to the workers and the community, and jobs for the people of Birmingham.
George Cadbury could have gone round the world, buying up chocolate firms, and getting very rich on profit, but he did something completely different, he put his profit and effort back into the community the factory served and the surrounding area.
He wasn't in it for a quick buck!
I do not hate foreigners James, far from it, I just wish that our government protected our industries as well as other nationalities protect theirs.
Can you explain to me why Renault, BMW, GM etc have never been taken over by a foreign firm?
Why is it that they are able to protect their main industries, but we are not? How is it they do not fall victim to a hostile takeover?
"FACTS:
Kraft took over Terry's in 1993 and moved production to Eastern Europe in 2005, a whole 12 years later ! "
Yes, and over the 12 years they had it, they deliberately stripped it off its most profitable products and moved them elsewhere.
Then, when (not surprisingly) they could not justify leaving what was left to be produced in the Terrys factory, they went to great lengths to pretend to be looking for an alternative site, whilst all along knowing full well they were going to shut the lot and shift it all to Poland.
It is well documented.
"Firstly you need to ask, HOSTILE to whom ?
Hostile, simply means not supported by the board of directors, who are the employees of the shareholders.
Nobody forces the shareholders (Owners) to sell, it is a free choice on their part, so no takeover is actually HOSTILE to the company.
In this case the actual takeover was not HOSTILE, the board of directors recommended the final Kraft offer to the shareholders".
It was hostile in the respect that Cadbury did not want it. Cadbury Board of Directors fought it for months, they were left to defend themselves!
Cadbury was a profitable company - it did not need Kraft. It took several goes and many months for the takeover to go through.
The Board of Directors fought it off as long as they could. But unlike other countries (where the government step in), ours were apparently powerless to do so, because unlike our EU and American neighbours, ours waived their right of intervention some years back.
"If your point is that state owned banks should be careful not to lend to businesses that already carry too much debt, then I agree".
Yes it is. But I would add to that also that banks which are propped up with UK taxpayer money, should not be involved in supplying loans to heavily in-debt foreign companies to buy out British companies.
"Cadbury was British for nearly 200 years and the Headquartes IS in Bournville.
Are you suggesting that any business with UK owners for an arbitrary period of time should be prevented from selling to foreigners?
Are you suggesting that any business with its headquarters in the UK should be prevented from selling to foreigners ?"
What I'm saying is that our core industries and long established firms should have greater protection to foreign hostile takeovers than they do already. Cadbury was a sitting duck.
Look at Danone. A few years back Kraft tried to take them over, but the French government intervened, came up with a Danone law and Kraft were sent packing!
Look in Europe! They still have all their core industries owned by their own country. We don't even own our own energy supplies. How dangerous is that?!
"Why is it wrong to want to make a quick buck ? Is it better to make a slow buck ?
Would you rather you had to work twice as many hours for the same pay to avoid being accused of wanting a quick buck ?"
The hedge fund share holders do not care about or have any loyalty to the company they hold shares in. A hedge fund holder in the Cadbury takeover had exactly the same voting rights as long term loyal shareholders who had a genuine interest in the company. I object to that. Had the longterm shareholders had a bigger say (or vote) in the future of Cadbury, I suspect that the outcome would have been very different.
No, it is not wrong to want to make money, but to do it at the expense of the welfare of other people, and regardless of the consequences is very wrong. The hedge fund holders had too much say. I think that the amount of hedge funds available for sale should be limited to a percentage of the overall amount of shares (say 20%) and the long term shareholders given a bigger say in any takeover deal than shareholders who have recently purchased shares and who are only in it for a quick purchase / profit.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
"Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!"
Go and visit Bournville! The residents there will tell you very differently. Cadbury are the very centre of the community. They have provided swimming pools, community halls, theatres, built 800 homes for their workers.
They DID care about their workers - Cadbury was different!
"Its entire reason for existence is to provide a return to the shareholders who have invested in it".
Its entire reason for existence was to provide a decent standard of living to the workers and the community, and jobs for the people of Birmingham.
George Cadbury could have gone round the world, buying up chocolate firms, and getting very rich on profit, but he did something completely different, he put his profit and effort back into the community the factory served and the surrounding area.
He wasn't in it for a quick buck!
helen donovan, Evesham says...
8:35pm Wed 10 Feb 10
Have a read of the many comments under this news story. People are very angry.
http://www.dailymail
.co.uk/news/article-
1249728/Cadbury-sack
s-400-workers-Kraft-
breaks-promise-shut-
factory.html
http://www.dailymail
.co.uk/news/article-
1249728/Cadbury-sack
s-400-workers-Kraft-
breaks-promise-shut-
factory.html
OnLiberty, Elmley Castle says...
10:15am Thu 11 Feb 10
I do not hate foreigners James, far from it, I just wish that our government protected our industries as well as other nationalities protect theirs.
Protect them from what ?
If you want to protect them from foreigners, because they are foreigners, then that is xenophobia.
If you want to protect them from take-overs then why focus on foreign companies why not restrict all take-overs , including those from other UK Companies ?
If your real concern is job losses, then even restricting UK take-overs won't do it, because the existing management may make redundancies.
What is it that you are concerned about that is specific to the FOREIGN take-overs of British companies ?
Can you explain to me why Renault, BMW, GM etc have never been taken over by a foreign firm?
Why is it that they are able to protect their main industries, but we are not? How is it they do not fall victim to a hostile takeover?
Some foreign governments put political considerations ahead of economic ones. They do not have a valid reason for their actions, they are just popular with the voters. Amazingly, in the UK we have the backbone to allow free markets to operate effectively.
Yes, and over the 12 years they had it, they deliberately stripped it off its most profitable products and moved them elsewhere.
Then, when (not surprisingly) they could not justify leaving what was left to be produced in the Terrys factory, they went to great lengths to pretend to be looking for an alternative site, whilst all along knowing full well they were going to shut the lot and shift it all to Poland.
It is well documented.
How can they strip "it" of its most profitable products, they owned "it". Where they stripping the profitable products from themselves?. Why is it terrible for a foreign owner to move production to Poland, but ok for the previous management of Cadbury to do it?
It was hostile in the respect that Cadbury did not want it.
Cadbury is a corporate entity, a legal construction, it does not have wants and desires of its own!
You cannot speak about what Cadbury wants anymore than you can say what the title deed to your home want.
A company is formed by shareholders who invest their money into a business venture.
The shareholders appoint a board of directors to manage the business for them.
The directors employ staff to operate the business.
The company is the property of the shareholders who take the financial risks and rewards of the venture. The directors and staff are paid a salary to work for the business.
Cadbury Board of Directors fought it for months, they were left to defend themselves!
Defend themselves from what ?
A company offered to buy the shares from the shareholders, for more than they were valued at on the open market. They were not under attack by a hostile force !
If someone offered to buy your home for more than it was worth would you be under attack and in need of defending ? You can either take the money or not as you choose.
The directors were not fighting, they were haggling !
They kept saying that the offer was not high enough, that it undervalued the business. When the offer was increased they recommended it to the shareholders. But the shareholders would have been free to accept the offer even if it was not recommended to them.
Cadbury was a profitable company - it did not need Kraft.
Are you suggesting that no takeovers should be allowed unless the business is making a loss.
That shareholders should not be allowed to sell their property if it is doing well, but only if it isn't ?
Who wants to buy a business that loses money ?
Can takeovers only be allowed if there is sufficient "need" ?
It took several goes and many months for the takeover to go through.
Yes the directors, on behalf of the shareholders haggled well and got the best price.
The Board of Directors fought it off as long as they could. But unlike other countries (where the government step in), ours were apparently powerless to do so, because unlike our EU and American neighbours, ours waived their right of intervention some years back.
By what principle it is OK for the government to prevent the owners of a company (their property) from selling it to whoever they please ?
What I'm saying is that our core industries and long established firms should have greater protection to foreign hostile takeovers than they do already.
What makes an industry ours ?
It can't be the nationality of the shareholders because in Cadbury's case they were mostly foreign.
It can't be the nationality of the management brcause in Cadbury's case they were American.
It can't be the nationality of the employees because in Cadbury's case they were mostly foreign.
It can't be the country they do business in because in Cadbury's case it is mostly outside the UK.
So why are you so keen to protect businesses that have their headquarters in the UK, or who have had UK shareholders in the past.
Why do they merit special protection ?
Do you really think that making chocolate bars is a core industry for the UK ?
Why do they need special protection from foreign takeovers as opposed to domestic takeovers ?
Why do the shareholders need protecting from accepting a price they find attractive for their property?
If it is the employees that you want to protect, they why focus on foreign take-overs. Domestic take-overs often result in job losses and so do encumbant UK management when they move their chocolate factories to Poland !
Cadbury was a sitting duck.
If by sitting duck, you mean that anybody was able to offer the shareholders a price for their property without interference and they could accept or reject such an offer without interference, then thankfully yes they, and most other forms of property in a free society, are "sitting ducks"
Look at Danone. A few years back Kraft tried to take them over, but the French government intervened, came up with a Danone law and Kraft were sent packing!
That was an unjustified interference in the rights of the shareholders of Danone to dispose of their property as they see fit. Imagine if you wanted to sell your house to an Asian and the BNP were in power and refused to let you. There is no difference, it is an unjustified interference for political motives.
Most shareholders are actually pension funds, so by preventing the take-over the French Government stole money from pensioners to please their voters. (Very noble?)
Look in Europe! They still have all their core industries owned by their own country. We don't even own our own energy supplies. How dangerous is that?!
What is a core industy?
Chocolate bars, yogurts ?
We live in a global economy, British companies have operations all over the world and foreign businesses operate in Britain. The markets are pretty good at ensuring the best management runs businesses whatever their nationality. Companies that are protected from take-overs in many cases underperform, as the market pressure to deliver results or be taken over has been removed.
The hedge fund share holders do not care about or have any loyalty to the company they hold shares in.
Once again you fall into the trap of thinking of the company in anthropomorphic terms. Does anyone have loyalty to a legal construction, a certificate of incorporation or indeed the title deed to a house?
The company is the shareholders who own it
The directors who they appoint to run the business
The employees who operate the business
A whole load of machines and buildings
Thats it !
Who is it the hedge fund holders should be loyal to ?
You can't accuse them of not being loyal to the owners (They are the owners)
A hedge fund holder in the Cadbury takeover had exactly the same voting rights as long term loyal shareholders who had a genuine interest in the company. I object to that.
You seem to be asserting that the right to decide what you do with your property should not be dependant on how much of it you own, but on how long you have owned it, how loyal you are to it and how interested you are in it.
How would you measure the amount of interest that each shareholder has?
How would you measure the amount of loyalty that each shareholder has ?
Why should length of ownership be more important than size of stake ?
Had the longterm shareholders had a bigger say (or vote) in the future of Cadbury, I suspect that the outcome would have been very different.
Perhaps. It would also have been very unjust on the people who actually own more of the business. Why should the minority owners dictate to the majority ? (I would not have a problem if this system was in place and known to all the shareholders in advance)
No, it is not wrong to want to make money, but to do it at the expense of the welfare of other people, and regardless of the consequences is very wrong.
I am not sure whose welfare or what consequences you mean ?
The hedge fund holders had too much say. I think that the amount of hedge funds available for sale should be limited to a percentage of the overall amount of shares (say 20%) and the long term shareholders given a bigger say in any takeover deal than shareholders who have recently purchased shares and who are only in it for a quick purchase / profit.
Firstly, how do you define a hedge fund ? There is no way to stop people from buying shares through nominee companies, in their personal names, via the brother-in-law, etc, etc, etc. If the Hedge fund managers want to take a position greater than 20% it would be impossible to know how much was owned or controlled by them.
If the company was set up with a voting structure that gave greater voting rights to longer term shareholders then I would not have a problem with it. It might even be a good idea. My only objection would be if this rule was imposed retrospectively on shareholders who were not aware of it at the time they invested.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
They were not forced!
When you buy a share in a company you get a piece of ownership of the company. The rights and obligations of that ownership are a contract that you enter into. One of the rules is that for a public company in a takeover situation, if more than a certain percentage of the shareholders accept an offer, you will sell at the same price.
If you enter into a contract that obliges you to do something in certain circumstances that is a free choice, you have not been forced to do anything that you didn't accept to do. Just because you would rather not do it when the circumstances actually arrive does not mean that you are forced.
"Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!"
Go and visit Bournville! The residents there will tell you very differently. Cadbury are the very centre of the community. They have provided swimming pools, community halls, theatres, built 800 homes for their workers.
I doubt very much that the certificate of incorporation provided any swimming pools !
The shareholders donated part of their property to the residents of Bournville, which was a wonderful and noble thing to do. When you speak about the company, you actually mean the shareholders of the company, its owners.
They DID care about their workers - Cadbury was different!
Yes they did, they being the shareholders of the company.
"Its entire reason for existence is to provide a return to the shareholders who have invested in it".
Its entire reason for existence was to provide a decent standard of living to the workers and the community, and jobs for the people of Birmingham.
George Cadbury could have gone round the world, buying up chocolate firms, and getting very rich on profit, but he did something completely different, he put his profit and effort back into the community the factory served and the surrounding area.
He wasn't in it for a quick buck!
The sole reason for the company was to provide a return to George Cadbury. He decided to donate some of his return to the people of the area. A very noble thing to do. But he either sold his shares or bequethed them to somebody who sold them.
These new shareholders were under no obligation to build swimming pools or homes for the community, that was George's choice of what to do with his money.
Just because somebody generous owned an item of property (The Company) does not mean that all subsequent owners must be generous.
Would you expect the people living in George's old house to fund these things just because George did ?
Have a read of the many comments under this news story. People are very angry.
People were very angry in Salem when they burnt the "witches", they were still wrong ;-)
Protect them from what ?
If you want to protect them from foreigners, because they are foreigners, then that is xenophobia.
If you want to protect them from take-overs then why focus on foreign companies why not restrict all take-overs , including those from other UK Companies ?
If your real concern is job losses, then even restricting UK take-overs won't do it, because the existing management may make redundancies.
What is it that you are concerned about that is specific to the FOREIGN take-overs of British companies ?
Can you explain to me why Renault, BMW, GM etc have never been taken over by a foreign firm?
Why is it that they are able to protect their main industries, but we are not? How is it they do not fall victim to a hostile takeover?
Some foreign governments put political considerations ahead of economic ones. They do not have a valid reason for their actions, they are just popular with the voters. Amazingly, in the UK we have the backbone to allow free markets to operate effectively.
Yes, and over the 12 years they had it, they deliberately stripped it off its most profitable products and moved them elsewhere.
Then, when (not surprisingly) they could not justify leaving what was left to be produced in the Terrys factory, they went to great lengths to pretend to be looking for an alternative site, whilst all along knowing full well they were going to shut the lot and shift it all to Poland.
It is well documented.
How can they strip "it" of its most profitable products, they owned "it". Where they stripping the profitable products from themselves?. Why is it terrible for a foreign owner to move production to Poland, but ok for the previous management of Cadbury to do it?
It was hostile in the respect that Cadbury did not want it.
Cadbury is a corporate entity, a legal construction, it does not have wants and desires of its own!
You cannot speak about what Cadbury wants anymore than you can say what the title deed to your home want.
A company is formed by shareholders who invest their money into a business venture.
The shareholders appoint a board of directors to manage the business for them.
The directors employ staff to operate the business.
The company is the property of the shareholders who take the financial risks and rewards of the venture. The directors and staff are paid a salary to work for the business.
Cadbury Board of Directors fought it for months, they were left to defend themselves!
Defend themselves from what ?
A company offered to buy the shares from the shareholders, for more than they were valued at on the open market. They were not under attack by a hostile force !
If someone offered to buy your home for more than it was worth would you be under attack and in need of defending ? You can either take the money or not as you choose.
The directors were not fighting, they were haggling !
They kept saying that the offer was not high enough, that it undervalued the business. When the offer was increased they recommended it to the shareholders. But the shareholders would have been free to accept the offer even if it was not recommended to them.
Cadbury was a profitable company - it did not need Kraft.
Are you suggesting that no takeovers should be allowed unless the business is making a loss.
That shareholders should not be allowed to sell their property if it is doing well, but only if it isn't ?
Who wants to buy a business that loses money ?
Can takeovers only be allowed if there is sufficient "need" ?
It took several goes and many months for the takeover to go through.
Yes the directors, on behalf of the shareholders haggled well and got the best price.
The Board of Directors fought it off as long as they could. But unlike other countries (where the government step in), ours were apparently powerless to do so, because unlike our EU and American neighbours, ours waived their right of intervention some years back.
By what principle it is OK for the government to prevent the owners of a company (their property) from selling it to whoever they please ?
What I'm saying is that our core industries and long established firms should have greater protection to foreign hostile takeovers than they do already.
What makes an industry ours ?
It can't be the nationality of the shareholders because in Cadbury's case they were mostly foreign.
It can't be the nationality of the management brcause in Cadbury's case they were American.
It can't be the nationality of the employees because in Cadbury's case they were mostly foreign.
It can't be the country they do business in because in Cadbury's case it is mostly outside the UK.
So why are you so keen to protect businesses that have their headquarters in the UK, or who have had UK shareholders in the past.
Why do they merit special protection ?
Do you really think that making chocolate bars is a core industry for the UK ?
Why do they need special protection from foreign takeovers as opposed to domestic takeovers ?
Why do the shareholders need protecting from accepting a price they find attractive for their property?
If it is the employees that you want to protect, they why focus on foreign take-overs. Domestic take-overs often result in job losses and so do encumbant UK management when they move their chocolate factories to Poland !
Cadbury was a sitting duck.
If by sitting duck, you mean that anybody was able to offer the shareholders a price for their property without interference and they could accept or reject such an offer without interference, then thankfully yes they, and most other forms of property in a free society, are "sitting ducks"
Look at Danone. A few years back Kraft tried to take them over, but the French government intervened, came up with a Danone law and Kraft were sent packing!
That was an unjustified interference in the rights of the shareholders of Danone to dispose of their property as they see fit. Imagine if you wanted to sell your house to an Asian and the BNP were in power and refused to let you. There is no difference, it is an unjustified interference for political motives.
Most shareholders are actually pension funds, so by preventing the take-over the French Government stole money from pensioners to please their voters. (Very noble?)
Look in Europe! They still have all their core industries owned by their own country. We don't even own our own energy supplies. How dangerous is that?!
What is a core industy?
Chocolate bars, yogurts ?
We live in a global economy, British companies have operations all over the world and foreign businesses operate in Britain. The markets are pretty good at ensuring the best management runs businesses whatever their nationality. Companies that are protected from take-overs in many cases underperform, as the market pressure to deliver results or be taken over has been removed.
The hedge fund share holders do not care about or have any loyalty to the company they hold shares in.
Once again you fall into the trap of thinking of the company in anthropomorphic terms. Does anyone have loyalty to a legal construction, a certificate of incorporation or indeed the title deed to a house?
The company is the shareholders who own it
The directors who they appoint to run the business
The employees who operate the business
A whole load of machines and buildings
Thats it !
Who is it the hedge fund holders should be loyal to ?
You can't accuse them of not being loyal to the owners (They are the owners)
A hedge fund holder in the Cadbury takeover had exactly the same voting rights as long term loyal shareholders who had a genuine interest in the company. I object to that.
You seem to be asserting that the right to decide what you do with your property should not be dependant on how much of it you own, but on how long you have owned it, how loyal you are to it and how interested you are in it.
How would you measure the amount of interest that each shareholder has?
How would you measure the amount of loyalty that each shareholder has ?
Why should length of ownership be more important than size of stake ?
Had the longterm shareholders had a bigger say (or vote) in the future of Cadbury, I suspect that the outcome would have been very different.
Perhaps. It would also have been very unjust on the people who actually own more of the business. Why should the minority owners dictate to the majority ? (I would not have a problem if this system was in place and known to all the shareholders in advance)
No, it is not wrong to want to make money, but to do it at the expense of the welfare of other people, and regardless of the consequences is very wrong.
I am not sure whose welfare or what consequences you mean ?
The hedge fund holders had too much say. I think that the amount of hedge funds available for sale should be limited to a percentage of the overall amount of shares (say 20%) and the long term shareholders given a bigger say in any takeover deal than shareholders who have recently purchased shares and who are only in it for a quick purchase / profit.
Firstly, how do you define a hedge fund ? There is no way to stop people from buying shares through nominee companies, in their personal names, via the brother-in-law, etc, etc, etc. If the Hedge fund managers want to take a position greater than 20% it would be impossible to know how much was owned or controlled by them.
If the company was set up with a voting structure that gave greater voting rights to longer term shareholders then I would not have a problem with it. It might even be a good idea. My only objection would be if this rule was imposed retrospectively on shareholders who were not aware of it at the time they invested.
There were 47,000 loyal Cadbury British Shareholders who were forced to sell up or hold US converted shares after the bid went through.
They were not forced!
When you buy a share in a company you get a piece of ownership of the company. The rights and obligations of that ownership are a contract that you enter into. One of the rules is that for a public company in a takeover situation, if more than a certain percentage of the shareholders accept an offer, you will sell at the same price.
If you enter into a contract that obliges you to do something in certain circumstances that is a free choice, you have not been forced to do anything that you didn't accept to do. Just because you would rather not do it when the circumstances actually arrive does not mean that you are forced.
"Cadbury is not a living entity, it is nothing more than the name given to the trading structure owned by the shareholders!"
Go and visit Bournville! The residents there will tell you very differently. Cadbury are the very centre of the community. They have provided swimming pools, community halls, theatres, built 800 homes for their workers.
I doubt very much that the certificate of incorporation provided any swimming pools !
The shareholders donated part of their property to the residents of Bournville, which was a wonderful and noble thing to do. When you speak about the company, you actually mean the shareholders of the company, its owners.
They DID care about their workers - Cadbury was different!
Yes they did, they being the shareholders of the company.
"Its entire reason for existence is to provide a return to the shareholders who have invested in it".
Its entire reason for existence was to provide a decent standard of living to the workers and the community, and jobs for the people of Birmingham.
George Cadbury could have gone round the world, buying up chocolate firms, and getting very rich on profit, but he did something completely different, he put his profit and effort back into the community the factory served and the surrounding area.
He wasn't in it for a quick buck!
The sole reason for the company was to provide a return to George Cadbury. He decided to donate some of his return to the people of the area. A very noble thing to do. But he either sold his shares or bequethed them to somebody who sold them.
These new shareholders were under no obligation to build swimming pools or homes for the community, that was George's choice of what to do with his money.
Just because somebody generous owned an item of property (The Company) does not mean that all subsequent owners must be generous.
Would you expect the people living in George's old house to fund these things just because George did ?
Have a read of the many comments under this news story. People are very angry.
People were very angry in Salem when they burnt the "witches", they were still wrong ;-)
helen donovan, Evesham says...
5:11pm Thu 11 Feb 10
http://www.guardian.
co.uk/global/dan-rob
erts-on-business-blo
g/2010/jan/19/kraft-
cadbury-takeover
co.uk/global/dan-rob
erts-on-business-blo
g/2010/jan/19/kraft-
cadbury-takeover
OnLiberty, Elmley Castle says...
8:50am Fri 12 Feb 10
http://mises.org/jou
rnals/jls/9_2/9_2_6.
pdf
rnals/jls/9_2/9_2_6.
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helen donovan, Evesham says...
1:38pm Thu 4 Feb 10
Yes, Cadburys downfall in part was due to allowing so many of their shares to pass into foreign hands, particularly the greedy hedge fund share holders who were only interested in making a quick buck, but the fact the deal was a HOSTILE takeover, and the deal financed by a state owned bank using UK taxpayer cash (which you don't mention) by an already hugely indebt American company, was what made it all so appalling.
Cadbury was British for nearly 200 years and the Headquartes IS in Bournville, but I wouldn't like to guess as to how much longer for, judging by what Kraft did to Terry's of York.