2 March 2010

A fresh look at takeover rules -

The Cadbury saga underlines the need for stronger protection against predatory takeovers in the UK. A number of initiatives could help - like restricting some of the ability of short term shareholders, such as hedge funds, to vote on acquisitions.

Along with my Birmingham colleagues I have raised this issue with government ministers and in Parliament - see EDM 679 Takeover of Cadbury and the House of Commons debate on 26th January.

I was therefore pleased to see that last night the Business Secretary Lord Mandelson called for takeover rules to be overhauled to benefit companies' workforces rather than short-term City speculators in the wake of the controversial sale of Cadbury to Kraft.

In his Mansion House speech at the annual trade and industry dinner hosted by the Lord Mayor of the City of London, Lord Mandelson said:

"I think we need a fresh look at mergers and acquisitions... In the case of Cadbury and Kraft it is hard to ignore the fact that the fate of a company with a long history and many tens of thousands of employees was decided by people who had not owned the company a few weeks earlier, and probably had no intention of owning it a few weeks later...

"It seems to me that we need to have a debate about how these various duties [of company directors] should be understood in the fast-moving circumstances of a takeover, when some of the company’s newest shareholders may not have a long term commitment to the company. Obviously we need Directors equipped to be stewards rather than just auctioneers. If this requires re-stating the 2006 Companies Act, then I am willing to do that."