Stitzer 'sees sense' in Kraft takeover

Todd Stitzer, chief executive of Cadbury, appeared yesterday to concede that a combination of his company and Kraft made "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 to walk away from its bid approach for Cadbury and that his "job is to get as much value as possible".

In what appeared to be an unusually candid admission from the chief executive of a bid target of the rationale

for a takeover, Mr Stitzer also spelt out specific synergies that could be extracted from merging the operations of the two

food groups.

Cadbury later insisted that a BofA sales note that summed up Mr Stitzer's comments was an "inaccurate reflection" of what was said in a private meeting and that the company's stance towards Kraft had not changed.

However, BofA yesterday only clarified one point attributed to Mr Stitzer. The sales 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 said he was referring to multiples for previous offers in the sector, such as Wrigley's unsuccessful attempt to buy Hershey in 2002, that valued the target "in the mid-teens".

Kraft approached the UK company three weeks ago with an indicative offer initially valued at 745p per share. That would represent about 13 times Cadbury's 2009 ebitda estimated by analysts.

Cadbury believes this undervalues the group and is pushing the US suitor to come forward with a formal takeover offer.

It approached the UK Takeover Panel on Monday to ask for a "put up or shut up" ruling, requiring Kraft to make a formal offer or abandon its bid for at least six months.

BofA said that Mr Stitzer did not expect Kraft to walk away and that he would be surprised if a counter-bidder came forward before the US group made its next move. BofA also reported that Mr Stitzer claimed that the synergies a combined group could gain included distributing Cadbury's gum brands through Kraft's retail business in Germany and China.

Shares in Cadbury rose 0.13 per cent to 789p while Kraft was flat at $24.60 in midday trading in New York.

Additional reporting by Julie MacIntosh in New York and Neil Hume in London