Takeover of Cadbury sparks job loss fears in Kenya plant

By Morris Aron

Jobs at chocolate maker Cadbury Kenya could go after US food conglomerate Kraft Foods successfully completed of a take over bid of the parent company.

The deal, concluded on Monday after months of intense activity that included attempts at a hostile takeover, saw British chocolate maker, Cadbury, agree to a £11.7 billion ($19.6 billion, Sh1.4 trillion) bid by Kraft Foods.

Cadbury Chairman, Roger Carr, told the BBC job losses were inevitable at Cadbury after the new development. The statement confirmed fears of possible job losses of at least 10,000 Cadbury employees worldwide, as Kraft Foods implements cost cutting measures in a new restructuring plan.

Cadbury Kenya, the local subsidiary which employs thousands of workers directly and indirectly, and who are the makers of Dairymilk range of chocolates, confirmed news of the takeover, but could not comment further.

Meaningful savings

Kraft Foods has already said that it expects to achieve "meaningful cost savings" as a result of the merger, without giving any specific assurances over the future of 45,000 workers worldwide.

News of the takeover came into the public lime light late last year. Kraft Foods had originally tabled a £10.9 billion bid for Cadbury in September last year. The bid went hostile in November, as Kraft took its proposals direct to Cadbury shareholders, instead of the board of directors of the company. Cadbury, and its shareholders, strongly resisted the move, obliging Kraft to raise its terms.

The final settlement to be signed next month closes the hotly contested merger, opposed by a Europeans who see the sale of Cadbury, to an American company as an affront to their national pride.

Its is now expected that new brands of sweets and chocolates may soon hit supermarket shelves if the American foods giant continues to use the current Cadbury worldwide distribution networks.

Cadbury has always distributed its sweets and chocolate brands in Kenya through its local subsidiary, Cadbury Kenya Limited.

The channel that could be exploited by the Kraft Foods to penetrate the Kenyan, and the wider East African market for its brands, which includes beverages and chocolate brands such as Dairylea, Kenco coffee and Chocolate Orange, as well as Philadelphia soft cheese, Toblerone, and Oreos, all of which are US household names.

Long wait

Kenyans will have to wait for some time before tasting Kraft Foods products as Cadbury and Kraft Foods complete the new distribution plan.

Kraft is the world’s second largest food firm, employing over 100,000 workers worldwide. The new deal is expected to create a global sweets and chocolates powerhouse with annual sales expected to top Sh3.7 trillion.

The entry of new sweets, chocolate and Dairy milk products into Kenya could herald competition in the confectionery business, which already has a strong presence of local and international brands.

The US group will borrow £7bn ($11.5bn) to finance the deal. The cost cutting measures are among avenues Kraft Foods intends to exploit to finance the money borrowed to conclude the takeover.