For the majority of the last decade (until November) I worked for Cadbury. I still live in Bournville only a few hundred meters from the famous factory.  I’ve been thinking how I feel about the news.  Cadbury was, in the main, a wonderful employer.  The pay, terms and conditions and pension were all good.  The people were all lovely.  The heritage of the company ran deep.  They were very supportive of work in the community; I am a governor of a local school and regularly carried out related duties in work-time with the full blessing of the company.  In comparison to my previous employer (one of the ‘big five’ management consultancies) first joining Cadbury felt like moving to a holiday camp.  Very flexible working and a big commitment to work/life balance.

Over the years the culture sharpened (and the work/life balance vanished!).  Make no doubt that despite the history, image and corporate good deeds Cadbury has been very capable of playing hardball in the market.  In the UK over the last couple of decades it bought out Trebor, Bassetts and Green & Blacks.  Overseas the shopping list has been far longer.  Brands like Halls and Trident chewing gum may only be bit players in the UK but overseas they are huge.  Although there is much made about the company’s ‘Britishness’ – it was first and foremost a multinational – the chief exec was American, my boss was based in Switzerland, and my Boss before that based in the US.  I have seen numerous reorganisations and watched colleagues with long service let-go, I also watched manufacturing be shifted from country to country as the company chased higher margins. The company may have had paternalistic instinct but it also had an aggressive streak. Cadbury built itself into an international heavyweight by smart acquisitions and business savvy.  The age old saying applies that if you live by the sword you die by the sword.  Kraft is doing to Cadbury what Cadbury has done to many others.

Some of the hysteria has been bizarre.  It is a statement of apparent absolute fact to the British that American chocolate is inedible. This has conjured up fears about Kraft messing with recipes.  Let’s apply some common sense here – Kraft is spending £11.5 bn because it recognises the strength of brands like Dairy Milk.  When you spend that much money you are not going to waste it by destroying the brand.  There will be no fiddling with the recipes.

Some of the concerns are valid though.  The obvious one is jobs.  With any take-over in the first instance your corporate functions (finance people, HR people, IT people, Legal people, etc.) end up ripe for headcount reduction as you suddenly have two of everything and these tend to be your highest payroll costs.  The people in the company taking over fair better.  Then as you merge your routes-to-market your sales force and marketing departments begin to feel the pressure.  Kraft has to make that £11.5bn back and I do fear that many of my former colleagues will suffer because of this.  It’s going to be a tough time of uncertainty for many hundreds of people and I wish them all the best.  I suspect there will be no change to manufacturing arrangements for a number of years (when the merger is complete) but even then I would expect any changes Kraft makes to be similar to what Cadbury would likely have done to itself if it remained a standalone company.   I’m sure this may include the shifting of yet more chocolate production from Birmingham to Poland.

I believe in the free market and therefore should be shrugging my shoulders about this deal.  I sold all my shares in the company last week so have lost the moral right to moan.  However, one thing still bothers me about the whole story.  The free market only works properly if everyone plays by the same rules.  About five years ago Cadbury very seriously looked at buying Hershey.  One of the key reasons that deal did not go ahead was that, although stockmarket listed, Hershey has articles that empower its controlling Trust to veto any takeover against the will of shareholders.  If they hadn’t had that legal protection Cadbury would have bought them and would now be too big for Kraft to buy.  Yet when the boot was on the other foot and the Americans come buying – Cadbury cannot play the same card.  That doesn’t seem right.  The British being beaten by our own sense of ‘fair play’.

So I am philosophical about the deal but my mood is tinged with a little sadness and frustration.  A deal with Hershey would have been a far better cultural, geographic and product fit.  I will watch carefully how it now plays out.

*As I have been typing this up my post has just arrived.  Ironically, there is a letter from Cadbury containing a brochure entitled ‘Further Reasons to Reject the Kraft Offer’.  It is actually quite a convincing read. What comic timing!