Cadbury CEO opposes Kraft bid
Cadbury Plc said it still opposes Kraft Foods Inc.'s 9.9 billion-pound ($15.9 billion) takeover approach and said reports that Chief Executive Officer Todd Stitzer had softened his stance were "misconstrued."
Bank of America-Merrill Lynch, which organized an investor conference where Stitzer spoke Sept. 22, said two days ago that Cadbury's chief indicated he may consider a higher bid from Kraft. An earlier Reuters report, which Merrill subsequently denied, said Stitzer had discussed a fair value for the London- based maker of Dairy Milk chocolate.
Stitzer "was asked a question about the strategic merit" of Kraft's offer at that conference, Cadbury said in a statement this afternoon. "Commentary on this issue has misconstrued Mr. Stitzer's remarks to imply a softening of his view regarding a combination between Kraft and Cadbury. For the avoidance of doubt, Mr. Stitzer does not believe that Kraft's proposal makes strategic or financial sense, and his comments should not be interpreted in any other way."
A Merrill spokeswoman declined to comment. Kraft spokeswoman Lisa Gibbons said the company had no comment.
Cadbury spokesman Trevor Datson said earlier today that the candy maker "proactively" contacted the U.K. Takeover Panel, the independent regulator that ensures offers comply with U.K. rules, after the reports of Stitzer's remarks.
Takeover Panel
"We have proactively been in contact with the panel in regards to some of the serious misrepresentation of Todd Stitzer's comments," he said by phone.
Datson declined to comment further or provide a transcript of Stitzer's remarks. Chris Jillings, deputy director-general of the Takeover Panel, couldn't be immediately reached to comment. The Financial Times reported earlier that the regulator was examining the CEO's remarks.
"By no means does Cadbury management give the impression they want to remain independent, and they stress they want to maximize value to shareholders," Merrill analysts and salesmen said in a note sent to clients during the conference. "Cadbury indicated that the next step is for Kraft to make a formal offer, at hopefully a more attractive price."
Stitzer told the conference that comparable transactions proposed in the candy industry had a multiple of earnings before interest, tax, depreciation and amortization in the "mid teens," Merrill sales specialist Simon Archer wrote.
Share Gains
Cadbury shares rose for a fourth straight day today, adding 5.5 pence, or 0.7 percent, to 800.5 pence, touching their highest since Sept. 8, the day after Kraft disclosed its bid approach.
"If you ever wanted a better example of a phony war, it would be hard to find it," said Jeremy Batstone-Carr, an equities analyst at Charles Stanley & Co. in London. "I don't think we're in this for anything other than the long term."
Kraft would probably have to pay 14.7 times Ebitda to be successful, according to the average of six analysts surveyed by Bloomberg News on Sept. 8. That implies a bid of about $21 billion, Bloomberg calculations show.
Shares of Cadbury have traded above Kraft's bid price, originally worth 745 pence, since the approach was first disclosed on speculation the U.S. company will be forced to raise its bid or a counteroffer will emerge. The value of Kraft's cash-and-stock bid is currently 726 pence per share.
Kraft Chief Executive Officer Irene Rosenfeld said the company wants to buy Cadbury but doesn't have to, according to the transcript of a presentation to employees on Sept. 24 released in a filing with the Securities & Exchange Commission today. Shares of Kraft rose 6 cents to $26.44 in New York trading this morning.