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City Regulator To Investigate Cadbury Takeover

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A report in the yesterday claimed City regulator  has commenced an investigation into the  by the U.S. conglomerate Kraft Foods.

The Panel has received complaints that Kraft misled shareholders over a promise to keep Cadbury's  open.

During the bitter takeover battle last November, Kraft said it would be able to continue operating the Somerdale factory and "preserve UK manufacturing jobs."

Last month, however, just weeks after completing the Cadbury takeover, Kraft chief executive Irene Rosenfeld announced the closure of the , with around 400 redundancies.

In so doing, the corporation may have broken rules requiring bidders to "prepare statements with the highest degree of care and accuracy" and not make "misleading" statements.

Jennie Formby of is in no doubt:

"Promises were made to the Somerdale workers, which it seems Kraft had no intention of fulfilling.  They appear to have been made in a cynical attempt to curry favour with the British public during what was an extremely unwelcome and unpopular takeover."

If the Takeover Panel agrees and finds Kraft deliberately or negligently deceived the market, it could pass the case to the Financial Services Authority, which has discretion to impose a heavy fine.

Later this month, the parliamentary Business Select Committee will question senior Kraft executives about the Cadbury takeover, their promise to keep the Somerdale plant open and future plans for the 186-year-old company's UK workforce.

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