Bittersweet bid

26 May 2010 By George Hay Follow @gfhay

The boutique helped secure the takeover of the UK chocolatier. But the UK M&A regulator has criticized the conduct of Kraft and its adviser during the bid, costing a Lazard banker his mooted job as the watchdog s chief. It s a blow to a firm whose main product is judgment.

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The UK Takeover Panel has criticized Kraft for breaking the standards enshrined in the Takeover Code during its successful bid for Cadbury earlier this year.

The Panel ruled that the U.S. food company did not have a reasonable basis for holding its belief that it could keep Cadbury's Somerdale facility open following the bid. Cadbury had already announced the plant would be subject to a phased closure from 2009 to 2010, with production transferred to new facilities in Poland.

Rule 19.1 of the Takeover Code states that each statement made during the course of the offer must be prepared with the highest standards of care and accuracy. Note 1 of the rule explains that financial advisors should be responsible for guiding their clients.

As such, the Panel further ruled that Lazard, Kraft's advisor, should have made further enquiries asking why its client believed Somerdale could be kept open. However, it said primary responsibility lay with Kraft and said Lazard's conduct was not sufficient to merit formal public criticism.

Peter Kiernan, a Lazard banker who advised Kraft, has withdrawn his candidacy to be the next directorgeneral of the Takeover Panel.

Lazard declined to comment.

Kraft said it accepted the Panel's ruling. The Panel has confirmed that we acted in good faith and has accepted that we had a sound commercial rationale for making our statements about Somerdale, it said. We regret that, once we had full information, it was not feasible to keep Somerdale open, as we'd originally believed possible.

Takeover panel ruling

Context News

The UK Takeover Panel has criticized Kraft for breaking the standards enshrined in the Takeover Code during its successful bid for Cadbury earlier this year.

Peter Kiernan, a Lazard banker who advised Kraft, has withdrawn his candidacy to be the next directorgeneral of the Takeover Panel.

Lazard declined to comment.

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