This may have been partly down to the iconic nature of the Cadbury brand, with the loss of its independence having a greater impact on the wider public than that of a lesser-known name, but there was undoubtedly a feeling that there was little a target company could do in the face of a hostile takeover.
Changes proposed this week by the Takeover Panel include measures to penalise buyers who renege on commitments made to the target company or its employees during the bidding process, forcing banks to publish their fees relating to a takeover and setting buyers a four-week limit for buyers to either make a bid or walk away once they have announced their intentions.
Business Secretary Vince Cable welcomed the changes, saying it had become ‘too easy’ for bidders to make hostile offers, but unions said the proposals did not go far enough and should take more account of the effect of takeovers on workers and communities.
The watchdog rejected calls to ban hedge funds and other short-term investors from voting if they had only bought stakes in the target company concerned after the takeover bid was launched, and also decided against raising the threshold needed to approve a takeover from the current 50 per cent plus one.
But will these changes make any difference to the number of takeovers? Already some investment bankers are suggesting four weeks is not always long enough to gather the necessary information and make an informed judgement, particularly if the board of the target company chooses to be obstructive.
Penalties for broken promises may prevent situations such as Kraft’s closure of its Bristol factory, which it promised to keep open during the bidding process, but buyers may on occasion decide that a modest fine is a price worth paying to gain agreement for the deal.
With the proposals now going out to consultation, the Takeover Panel must ensure its proposals do not block desirable deals which are in the best interests of all parties, but if the changes serve to prevent another national icon such as Cadbury falling into foreign hands they are likely to have public opinion on their side.
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