Kraft criticized by regulator over Cadbury deal

Kraft Foods Inc. was criticized by a U.K. merger regulator for misstating plans to keep a plant open as part of its acquisition of Cadbury Plc. An investment banker on the deal dropped plans to head the agency after the censure was issued.

Lazard & Co. was responsible as Kraft's lead financial adviser for making recommendations on merger rules, the U.K. Takeover Panel said today in its first public reprimand in three years. Peter Kiernan, a Lazard managing director on the U.K. M&A team, was scheduled to begin a term as director general of the London-based panel this year. Kiernan withdrew his offer to serve after the findings, the regulator said.

Kraft misstated its intention to keep a Cadbury plant in Somerdale, England, open, reversing the pledge when it decided to move the factory to Poland, the takeover panel said. Kraft in January agreed to buy the maker of Creme Eggs and Dairy Milk chocolate, for about 11.7 billion pounds ($17 billion) in a deal that created the world's largest confectioner.

"The statements made by Kraft regarding the Somerdale facility were not prepared to the standards required," the Takeover Panel said in the statement.

Kraft, based in Northfield, said in a separate statement that it acted in good faith.

"Even though we never made a promise or a commitment to keep the facility open, we recognize that our 'statement of belief' created uncertainty among Somerdale employees," Kraft General Counsel Marc Firestone said in a statement. "We regret that, once we had full information, it was not feasible to keep Somerdale open, as we'd originally believed possible."

No AppealLazard spokesman Richard Creswell declined to comment. Kiernan didn't respond to calls seeking comment.From the start of Kraft's unsolicited takeover of Cadbury, begun in September, Chief Executive Officer Irene Rosenfeld said she believed the company would continue to operate the Somerdale plant, which Cadbury had already began shutting. Seven days after Kraft's offer was made unconditional, Rosenfeld on Feb. 9 said it was "unrealistic to reverse the closure program, despite our original intent to do so." The Somerdale factory employed about 400 Cadbury workers.The Takeover Panel's last public criticism came in 2007, of Australian hedge fund manager Monterrey Investment Management Ltd. for not failing to disclose dealings in the stock of iSOFT Group Plc, a U.K. software company that was merging with IBA Health Ltd."We have decided to accept publication of the panel's decision rather than proceed to an administrative appeal," Firestone said. "We believe it's best for everyone to put this matter behind us."