Kraft Foods (KFT), the largest packaged-food company in the U.S., has made some enemies in the U.K. The company came under attack on Tuesday from a committee of U.K. lawmakers in a report critical of moves the American company made after its hostile $17.5 billion takeover of Cadbury, the beloved British candymaker.
The report by the U.K.'s Business Select Committee accuses Kraft of acting "irresponsibly and unwisely" after reneging on a promise to keep a Cadbury factory in Somerdale open, the Associated Press reported. The British candymaker was in the process of moving the plant's production to Poland, resulting in the loss of 400 jobs. Kraft backtracked on its pledge once the deal closed after it realized that most of the plant's production capacity had already been moved overseas, according to the Financial Times.
"We conclude that Kraft acted both irresponsibly and unwisely in making its original statement," the British report says. "Kraft has left itself open to the charge that either it was incompetent in its approach to the Somerdale factory or that it used a 'cynical ploy' to improve its public image during its takeover."
Kraft's bruising four-month battle for the English confectioner left a bitter taste in Britons' mouths, fueling calls for a so-called "Cadbury law" to prevent hostile takeovers of U.K. companies by foreign multinationals.
Kraft, a component of the Dow Jones Industrial Average ($INDU), apologized for breaking promises made during the takeover and pledged not to cut any more jobs among Cadbury's U.K. manufacturing base, but British labor leaders aren't buying it.
"Never again," says Jack Dromey, deputy general secretary of the U.K.'s largest trade union, "should the short-term interests of shareholders and the hedge-fund boys in red braces making a quick buck come before the long-term interests of household-name British companies and the thousands of jobs and families these companies support."
Small Cap Investing
Learn now to invest in small companies the right way.View Course »