Britain's takeover watchdog is reviewing private comments by Cadbury's chief about the company's valuation amid a potential takeover by Kraft Foods, saying Todd Stitzer had stoked uncertainty in the market, i was reported today.
Citing people familiar with the matter, the
Financial Timessaid that the UK Takeover Panel was concerned that Mr Stitzer's remarks, made privately to investors and reported by Bank of America analysts, were unclear.
Companies subject to takeovers are prohibited from disclosing their views on bids selectively.
Cadbury had earlier rebuffed Kraft's bid as too low. But in private comments, Mr Stitzer detailed potential benefits from a takeover by Kraft and discussed valuations with investors. Experts say his remarks could set a pricing framework for talks between the British confectioner and the food company.
Kraft's £10 billion approach makes "some strategic sense", Mr Stitzer said, according to a note from Bank of America/Merrill Lynch on Wednesday.
Past deals in the industry have been agreed at higher multiples than Kraft's offer, Mr Stitzer said, referring to a multiple of 15 times earnings before interest, taxes, depreciation and amortization (Ebitda), according to the note.
Credit Suisse estimates that Kraft's offer values Cadbury at about 12.5 times 2009 EBIDTA.
Mr Stitzer also outlined potential areas of revenue synergies with Kraft in markets like Germany, China and Brazil, according to the note.
Mr Stitzer made his comments this week at a two-day Bank of America/Merrill Lynch conference in London, after which a sales specialist for the bank published his remarks.
A Cadbury spokesman stressed on Wednesday that Mr Stitzer's comments were theoretical and did not signal a shift in the company's position on Kraft's proposal.
Cadbury chairman Roger Carr said in a letter to Kraft chief executive Irene Rosenfeld dated September 12th that being absorbed into Kraft's low-growth conglomerate business model would be an "unappealing prospect".
A Kraft acquisition of Cadbury would create a giant confectioner with about 15 per cent of the global marketplace, rivaling industry leader Mars.
Cadbury had asked the panel, an independent body that supervises takeovers, to set a time limit on Kraft's offer and force Kraft to put in a formal bid within a certain timeframe or walk away.
Kraft launched its bid for Cadbury on September 7th in a deal to create the world's biggest confectionary group.
The Takeover Panel, established in 1968, supervises and regulates takeovers and aims to ensure fair treatment for all shareholders in takeover bids.
Reuters