Cadbury Deal Need Not Leave Such a Bad Taste

THERE has been an outpouring of anger at the news that American confectionery conglomerate Kraft — maker of Dairylea cheese amongst other things — is buying Cadbury, the Midlands-based maker of Bournville and Dairy Milk.

Those who are angry about the sale are not completely crazy; they do have a case to make — it is just not a very good one.

The first objection is that British jobs are at risk. True. But we must not forget that Cadbury has also had to make people unemployed in recent years, Kraft has pledged to keep making chocolate in Britain, and if it does take Cadbury's products to a wider market, it may even need to employ more, not fewer, workers.

The second is that it is against the spirit of the Cadbury brand, with its history of philanthropy and workers' model communities at Bournville, Birmingham. A great great grand-daughter of George Cadbury has described the sale to the big American food corporation as "a horror story". But to pretend that this is the same company as it once was is deeply disingenuous stuff. The Cadbury family long ago sold the bulk of the company — nowadays they only own a small percentage of the shares — to the American food corporation Schweppes, and since then it has been a regular public company owned mainly by pension and hedge funds.

The third, and most emotive, is that it is a great British company, a lasting testament to our ability as Brits to actually do something other than make loans and services. A vast majority of respondents to a poll — admittedly in the Guardian — said that there should be more protection for British companies from foreign bidders ("yes, we're selling our national heritage") as against under a fifth who disagreed. For the last 30 years, we have had a relaxed attitude to foreigners owning companies started by Brits. BAA is owned by a consortium led by Spaniards; ScottishPower is owned by a Spanish company, Boots is owned by a continental group, and Jaguar Land Rover is owned by Indian company Tata. As Sky Television's Jeff Randall points out, our ports, airports, mobile telephone operators, energy groups, water suppliers, banks, steel makers, car manufacturers, glass producers and retailers have all been sold to foreigners.

Granted, this has a certain superficially alarming air to it, until you ask yourself the harder question of why it is actually bad. Surely this is brand loyalty gone mad. After all, patriotism is one thing, but surely it should mean loyalty to the country where you were born or where you live, not to a company which has paid brand consultants over the years to come up with slogans such as "And all because the lady loves", to win your loyalty. Companies sometimes deserve brand loyalty, and the repeat sales it generates, but patriotism?

And there is evidence that foreign takeovers are not necessarily bad for the companies or the economy. Firstly, a 1999 study from the University of Portsmouth found that while foreigners did often close factories, workers in those that remained tended to get higher wages and produce more output.

Another study from 2006 found that workers whose employers were taken over by US multinationals on average saw their salaries go up by 8 per cent for skilled workers, and 13 per cent for unskilled workers.

Besides, those angry at the deal ignore the obvious: Kraft wants Cadbury so it can sell more Cadbury products, not less. Just because they're not British, doesn't mean they're asset strippers. It may not have occurred to those angry about the loss of the historical maker of Creme Eggs that if they like them, people in Russia and China might, too. These are markets that dear old Cadbury did not reach.

But the biggest rebuttal to this deal's critics is simple: it belongs to the shareholders. This begs the question of what those who oppose the deal want the government to do. Nationalise Cadbury? Pass a law to forbid it? The truth is that although these critics don't like the deal, they recognise that it will be a decision voted for, ultimately, by its shareholders. Since Cadbury has been a public company, anyone could buy shares in it, and the bald fact is that very few of those shares were owned by members of the Cadbury family. However much Gordon Brown and Peter Mandelson express their regret and determination to keep jobs in Britain, all parties know the decision is simply not up to them.

Perhaps the most constructive suggestion for the future has come from the Unite union — changing the rules to make sure that hedge funds' decisions on the ownership of British companies are made in those companies' long-term interests.