Newsnight has reported tonight that Labour is to include a 'Cadbury law' in its manifesto. The basic idea here is to make it more difficult for foreign companies to buy UK companies.

Under Cadbury's Law, it would be harder for overseas takeovers of UK companies to happen - requiring two thirds of shareholders to agree, not 50% as it is now.

First of all, this is typical Labour fare - as Macbeth might put it, a tale told by an idiot, full of sound and fury signifying nothing. In the case of Kraft's takeover of Cadbury, some 75% of Cadbury's shareholders voted in favour of the deal. Even under Labour's proposal, the deal would still have gone ahead.

And by what right does Labour interfere with private property anyway? Cadbury Schweppes, as a public limited company, belonged to its shareholders. Before Kraft made its bid public, Cadbury shares were trading at about £5.00 each. The final deal valued Cadbury shares at over £8.00, in the space of about four months. If you own something and someone offers you nearly double your money for it, shouldn't you be free to decide whether to sell it?

Labour's unease comes because some workers lost their jobs. The unions are asking them to "do something" and are angry at what they see as Kraft's addiction to closing British chocolate factories they've bought. Yet Cadbury was already closing the factory; Kraft had merely tried to make the deal sweeter to politicians by promising to try to keep it open. When they finally got control of Cadbury, they realised it was too far committed to the closure.

Making companies more difficult to take over will increase the strength of management at the expense of shareholders. That could mean bosses getting enriched and savers/pensioners getting poorer. Gordon Brown doesn't have good form on pensions; instinctively he seems to lack empathy with ordinary people and their struggle to save enough for their pensions.

Yet, so many takeovers are virtually unanimous, that it's possible that - as with Kraft/Cadbury - the change won't make any difference. But it's the perfect diversion to keep the unions sweet and try to hoodwink voters.

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Filed under: Current issues, Financial management, Politics with tags cadbury, cadbury law, kraft, left wingers, pensions, takeovers