Hedge Funds’ Short-Term Thinking: Does It Matter for Merger Payments?

In 2010, Roger Carr, then-chairman of British confectionery Cadbury, waged a grueling five-month battle before losing control of the company to Kraft Foods.  “At the end of the day,” he said, “there were simply not enough shareholders prepared to take a long-term view of Cadbury and prepared to forgo short-term gain for longer-term prosperity.”

In response to the deal, the Guardian newspaper asked whether it was time to regulate hedge funds’ activities to protect premier UK companies from inefficient takeover bids. Hedge funds held 5 percent of Cadbury at the time of Kraft’s bid, and, according to Roger Carr, short-term … Read more