Former Cadbury chairman calls for UK to tighten takeover rules

Former chairman of Cadbury Plc said that the UK government must overhaul rules on mergers and acquisitions as the current rules are not in the long-term interests of British business.

Carr was forced to accept the hostile $18.6-billion bid from the US food giant Kraft Foods last month. (See: Cadbury finally falls to Kraft's sweetened bid)

The former chairman of the iconic 186-year old UK confectioner stepped down last week after Kraft took control of the company late last month. (See: Shareholders approve Kraft's acquisition of Cadbury)

Speaking at the Said Business School in Oxford, England this week, Carr, who oversaw one of the most acrimonious takeovers in the UK's corporate history, said that the UK takeover rules should be changed to 60 per cent of shareholders approving a takeover, rather than the present 50.1 per cent in order to reduce the power of hedge funds, which buy a company's stock after a bid has been made.

During the four-month period after Cadbury first rejected Kraft's takeover proposal in early September, (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer), hedge funds, looking for quick profits acquired 26 per cent of Cadbury stock from long-term investors.

Eight of the largest buyers were hedge funds or other short-term traders, who booked profits in millions in a very short span of time, said Carr.