UPDATE: Cadbury: CEO Misconstrued, Kraft Stance Not Softened
26 September 2009 - 12:44AM
Dow Jones News
Cadbury PLC (CBY) insisted Friday its chief executive does not
believe a GBP10.2 billion bid from Kraft Foods Inc (KFT) makes
strategic or financial sense and there has been no softening of the
company's stance on the bid's merits.
In a brief statement the company claimed Chief Executive Todd
Stitzer's comments at an investor conference this week had been
"misconstrued."
"For the avoidance of doubt, Mr. Stitzer does not believe that
Kraft's proposal makes strategic or financial sense for Cadbury and
his comments should not be interpreted in any other way," the
company said.
The clarification follows alleged comments by Stitzer at an
investor conference earlier this week.
In a note to clients Bank Of America analyst Simon Archer said
Stitzer had told investors at a private meeting he doesn't expect
Kraft Foods Inc. (KFT) to walk away from its bid for the U.K.
confectioner and sees his responsibility as getting as much value
as possible from a deal.
The note also said that Stitzer claimed the deal made "strategic
sense."
Archer said at the time that Stitzer implied a price of around
15-times current year earnings, or around 900 pence a share, was
"fair" - a comment Archer later retracted.
Cadbury has so far refused to make public what Stitzer actually
said.
Earlier Friday Cadbury was reported to be in talks with U.K.
regulator The Takeover Panel over a "misrepresentation" of
Stitzer's remarks.
While Cadbury has insisted there has been no change in its
position to Kraft's offer, the market took the reported comments as
a softening of Cadbury's stance. Just two weeks ago, Kraft was
dismissed as a "low-growth conglomerate" and its bid "unappealing"
by Cadbury Chairman Roger Carr in an open letter to Kraft.
"Cadbury's position in relation to Kraft's proposal remains
precisely as set out in the letter to Kraft issued on Sept. 12,"
the company said Friday.
Cadbury shares were little moved on the announcement, up 4
pence, or 0.5%, at 799 pence by 1400 GMT.
On Sept 7, Kraft, based in Northfield, Ill., offered to pay 300
pence in cash and 0.2589 new Kraft Foods shares for each Cadbury
share - valuing the U.K. company's share capital at GBP10.2
billion.
The bid was originally valued at 745 pence per Cadbury share,
though a fall in Kraft's share price since the announcement means
that valuation is now closer to 700 pence.
Cadbury will be hoping Friday's statement will draw a line under
the matter. The question of what Stitzer did or didn't say at a
private meeting with investors has dominated media coverage of the
Cadbury bid process over the last few days.
"Cadbury are clarifying remarks which may or may not have been
made and are not particularly germane to the process anyway," said
Investec analyst Martin Deboo.
Analysts have said from the drama's outset that Kraft's bid
makes strategic sense, while the price Stitzer reportedly "named"
as fair at Wednesday presentation is sufficiently full to show that
he values Cadbury highly.
Analysts instead are looking to U.K. market regulator The
Takeover Panel for the next catalyst in the bid process.
Cadbury approached the Panel earlier this week to request a
"put-up-or-shut-up" order, which provide a deadline for Kraft to
either make a bid or walk away from a deal for six months.
The Panel is expected to issue a ruling within the next few
working days.
Company Web site: www.cadbury.com
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278;
michael.carolan@dowjones.com
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