Kraft wins a battle for Britain’s Cadbury and will become the world’s biggest confectioner

THE intervention of a government minister in Kraft’s battle to buy Cadbury says much about the strength of British feeling for their favourite chocolate-maker. The American food giant’s sweetened offer, too toothsome to turn down, was accepted by Cadbury’s board on Tuesday January 19th. Kraft will pay GBP11.9 billion ($19.4 billion) for Cadbury in cash and shares, some 50% more than the firm’s value before the bidding started in September. Yet last week Britain’s business secretary, Lord Mandelson, warned a big group of the country’s institutional investors—doubtless fixing those from Cadbury with a narrowed eye—against the dangers of short-termism.

A month earlier he had promised Kraft that the British government would scrutinise a foreign buyer to ensure that “respect” was paid to Cadbury’s proud heritage. The firm has been catering to the British for 186 years. In a country that cheerfully waves in foreign buyers for its businesses the threat of “huge opposition” from the government was an unusual change of tone. Kraft too received some words of wisdom on its attempted takeover from a senior American, although the advice of Warren Buffett was of a more practical kind. His investment firm, Berkshire Hathaway, is a big shareholder in Kraft. Reckoning that Kraft’s shares are undervalued he counselled the firm’s bosses not to let their “animal spirits run high” and overpay for Cadbury. …