A senior Birmingham business leader has said there would be no reason for Cadbury shareholders to accept the hostile takeover by rival Kraft – but defended part-nationalised Royal Bank of Scotland’s role in the bid.

Birmingham Chamber of Commerce and Industry chief executive Jerry Blackett said Cadbury is a strong independent business, and a link with US firm Kraft would only weaken its business model.

The bid came in for criticism by Birminghampost.net blogger Professor David Bailey this morning because Royal Bank of Scotland, which is majority-owned by the taxpayer, has given financial backing to the potential takeover.

But Mr Blackett said the bank should be free to operate profitably, despite the tax-payer involvement.

He said: “I think it is a dead end argument. Where do you end with that approach? Do you develop a long list of businesses that you allow banks to work with?

“Kraft will get the money for this bid from somewhere because it is such an attractive opportunity. If we were to close the door to RBS funding up would pop another bank.”

Mr Blackett added: “I can’t see that there is any upside of this bid in terms of the performance of Cadbury as a business.

“Bids often come when a company is under-performing and needs a shot in the arm but Cadbury is a very successful global business and I don’t see that it will gain anything by teaming up with Kraft.”

Labour MP Khalid Mahmood has written to Chancellor Alistair Darling expressing concerns about future jobs in the region if Toblerone-maker Kraft is successful in its £9.8billion takeover, and wants an investigation into how RBS is being allowed to lend £630 million for the bid.

He believes that the first priority of the government-controlled RBS should be to support British business.

Prof Bailey said: “Of course the government repeats the mantra ‘we don’t want to be bankers’. No - it is just bank-rolling their socially destructive activities. This isn’t really what I hoped for when I paid my taxes, and reflects the naivity of labour’s great banking bail-out.”

Cadbury’s board rejected the Oreos and Dairylea maker’s initial approach on September 5. The US firm said it was “convinced” of the merits of a merger.

To see David Bailey’s blog, visit: http://blogs.birminghampost.net/business/2009/11/the-hedge-fund-merger-men-move.html#more