Takeovers playing field is not level, says ex-Cadbury chairman

The ousted chairman of Cadbury, once a champion of takeovers, has started questioning the foundations on which he built his career.

A week after Kraft won control of the confectionery company, Roger Carr suggested the rules need changing to protect businesses against hostile bids.

"While capitalism is efficient, it may be unreasonable that a few individuals with weeks of share ownership can determine the lifetime destiny of many," he admits.

The former director of the Bank of England is proposing that bids succeed only if they are backed by holders of at least 60 per cent of shares - not the current simple majority. And he wants hedge funds and other speculators barred from voting shares bought during a bid.

It is a Damascene conversion for a businessman whose success was based on takeovers. He was in charge of acquisitions at the conglomerate Williams Holdings when it bought brands including Yale, Chubb, Polycell and Crown Paints. Later, as chief executive in the 1990s, he demerged them when conglomerates fell from favour. Carr has also chaired Thames Water, Mitchells & Butlers and Centrica, where he instigated a £1.3 billion ($2.9 billion) hostile bid for Venture Production last year.

"It would be hypocritical of me, therefore, to say the system has no merit," he concedes. "If you live by the sword it is not unreasonable you die by the sword."

Yet having lost a bruising takeover battle, he revealed his doubts at Oxford's Said Business School last week. "Arising from the ashes of the takeover of Cadbury is a general concern that the playing field might not be level," he says. "In recent times, something has happened to the system that appears to tip the playing field towards short-termism."

Carr does not have a sentimental view of the company where he was a director for nine years and chairman for the past two. "The popular myth of Cadbury among the public was an old-fashioned family business run by chocolatiers with Quaker principles - a great British business with its roots in Bournville and its heritage in Victorian England," he says. "It was an Enid Blyton image that the media readily portrayed and which coloured much of the general public's reaction when the company was finally sold."

Reality was different. The company changed when the Cadbury family floated it. It grew through its own takeovers - Schweppes and Green & Black's in Britain, Dr Pepper and the Adams gum business in America - and chewing gum is now more important that chocolate.

Kraft was criticised last week for closing the Somerdale plant and transferring chocolate-making abroad, but it was Carr who made the decision. "Some of the most recent and material investments had been made in Poland to replace UK production," he says. "In reality, Cadbury had become a global business whose shape and size owed more to acquisition, demergers and disposals in the past 10 years than the evolutionary development of the previous 150."

- INDEPENDENT