Cadbury’s chief ‘sees sense’ of a Kraft takeover

Todd Stitzer, chief executive of Cadbury, has appeared to concede that a combination with Kraft makes “strategic sense”.

Bank of America/Merrill Lynch revealed that Mr Stitzer had told a conference organised by the investment bank that he did not expect Kraft would walk away and that his “job is to get as much value as possible”.

The bank said he spelt out specific synergies that could be extracted from merging the operations of the two multinational food groups.

Cadbury later insisted the comments were an “inaccurate reflection” of what was said in a private meeting and that the company’s stance towards Kraft had not changed.

BofA only clarified one point attributed to Mr Stitzer in a sales note summing up the conference. The note initially reported that Mr Stitzer had said a price equivalent to 15 times its earnings before interest, depreciation, tax and amortisation was fair. BofA later clarified that that he was in fact was referring to multiples for previous takeover offers in the sector, such as Wrigley’s unsuccessful attempt to buy Hershey in 2002, that valued the target “in the mid-teens”.

Cadbury is pushing Kraft, which approached the UK company three weeks ago with an indicative offer initially valued at 745p per share, to come forward with a formal takeover offer. It approached the UK Takeover Panel on Monday to ask for a so-called “put up or shut up” ruling.

A ruling would require Kraft to make a formal offer for Cadbury or abandon its bid for at least six months. “Todd admitted that there is some strategic sense in combining the two companies and he doesn’t expect KFT [Kraft] to walk away, so he said his job is to get as much as value as possible. Todd would be surprised to see a counter-bidder come forward until KFT has made its next move,” the BofA note said.

Mr Stitzer’s comments echo previous remarks from Roger Carr, Cadbury’s chairman, saying Kraft’s approach undervalued Cadbury.

BofA also reported that Mr Stitzer claimed revenues identified by Kraft in a Cadbury takeover were “modest”. Apart from cost cuts, he said a combined group could gain from distributing Cadbury’s gum brands through Kraft’s retail business in Germany and China.

Additional reporting by Julie MacIntosh in New York