Watchdog probes Kraft over Cadbury buyout

Kraft is under investigation by UK regulators over whether it misled Cadbury employees and investors in its battle to take over the confectioner, it was reported today.

The US food giant has attracted strong criticism for changing its mind over keeping open a Cadbury factory near Bath, which is now set to close with the loss of hundreds of jobs.

According to reports in the Wall Street Journal, the City's takeover panel is looking into comments made by Kraft executives during the buyout.

Kraft officials had said in its initial approaches to Cadbury that the Somerdale factory would be kept open, despite the UK firm's plans to move production to Poland.

But in February the US firm announced that the plant would shut by 2011.

Kraft sealed the Cadbury deal in February after a bitter five-month tussle with the UK firm.

But the purchase has continued to attract controversy, particularly on the subject of UK jobs.

The Business Select Committee will question Kraft executives later this month on the company's future plans.

Last month the US firm said it was "unrealistic" to reverse Cadbury's plans to shut the Somerdale factory.

It said Cadbury had already spent £100 million on building new facilities in Poland and most production would be transferred by the middle of this year.

And this month Kraft further drew the fire of UK unions when it announced its first job cuts within weeks of the takeover.

Up to 150 jobs are threatened at Cadbury's offices in Uxbridge, west London, and Bournville in Birmingham as Kraft looks to cut out duplications in its newly enlarged operations.

Products manufactured at the Somerdale site include Fry's Chocolate Cream, the Double Decker, Dairy Milk, Chocolate Buttons, Creme Eggs and Mini Eggs, Cadbury's Fudge, Chomp and the Crunchie.