Deals and IPOs

Cadbury Snapped Up: The UK View

Kraft got a "very good deal" with its takeover of UK chocolate-maker Cadbury and the U.S. food giant will take care not kill Cadbury's value, Warren Ackerman, research analyst at Evolution Securities, told Tuesday.


"If you've paying 12 billon pounds you are not going to try and destroy the goose that lays the golden egg," Ackerman said.

Kraft's successful bid values the UK company at nearly $19 billion and comes after a long and protracted standoff between the two rival with Cadbury dismissing earlier bids as inadequate.

"I think it's a very good deal for Kraft … it still seems to be a very attractive and low price," he said. "The fact that it's been recommended by the company means it is likely to be accepted by shareholders."

Cadbury, which was established more than 180 years ago, will strive to keep its identity as a separate company and not be swallowed up by the larger U.S. firm, according to Ackerman.

"I would be very surprised if Cadbury haven't put in place safeguards to protect their culture, their brands and their employee welfare," he said.

"I don't think they will be that keen to simply be subsumed into the bigger entity," he added.

Even though there is no clear outlook on how the strategy of the two companies will change in the wake of the deal, there will inevitably be some job losses for Cadbury, Ackerman said.

Unions representing Cadbury employees such as Unite have expressed their concerns in the run up to the deal as expected cost cutting could lead to a large number of UK job cuts.

"It's definitely not a happy day, we've seen so many companies leave these shores," Anthony Scott, director of private clients at Charles Stanley, told CNBC.

There are concerns over tax revenue and employment with UK companies being taken over, he said.

"We've still got until Friday to see whether or not Hershey is likely to come and join the party," Scott added.

After the deal was announced, UK Prime Minister Gordon Brown told a news conference he wanted to protect investment and jobs in the company.

"The one thing I want to say is this: we are determined that the levels of investment that take place in Cadbury's in the United Kingdom are maintained," Brown said.

"We are determined of course, that at a time when people are worried about their jobs, that jobs in Cadbury can be secure," he added.

The relatively low value of the pound means that takeovers of UK companies by foreign counterparts will likely be common in 2010, Ben Rogoff, fund manager at from Polar Capital, told CNBC.

"M&A is going to be a big feature of this year, cash returns are very low… The UK market is notoriously open, the authorities have been very reluctant in the past to step in and stop deals unlike other major European markets," he said.

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