2nd UPDATE: Cadbury: CEO Misconstrued, Stance Not Softened
26 September 2009 - 2:33AM
Dow Jones News
U.K. confectionary group 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 for Cadbury and
there has been no softening of the company's stance on the offer'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 in London that 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", echoing comments he made to the Wall Street Journal earlier
in the week.
Earlier Friday Cadbury was reported to be in talks with U.K.
regulator The Takeover Panel over a "misrepresentation" of
Stitzer's remarks. The talks with the U.K. regulator are likely to
have prompted the "clarification" by Cadbury.
Shares in the U.K. confectionary company were little moved by
the announcement, up 6 pence, or 0.7%, at 801 pence by close of
trade.
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.
"We're back now to where we were, said Charles Stanley's Jeremy
Batstone-Carr. He agreed the story about the Stitzer's alleged
comments have had little impact on the actual bid.
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.
Batstone-Carr expects the Takevover Panel to issue the order and
give Kraft "a month or so" to make a decision.
"For Cadbury's management there remains a few nervous weeks
before its resolved," he said.
Company Web site: www.cadbury.com
-By Michael Carolan, Dow Jones Newswires; 44-20-7842-9278;
michael.carolan@dowjones.com