Strategic sense in Kraft tie-up, but not enough value: Cadbury CEO
Cadbury Chief Executive Todd Stitzer has admitted there would be “some strategic sense” in a tie-up as Kraft and Cadbury set about embarking on talks with their own investors this week.
The maker of Dairy Milk has, however, remained steadfast in their opinion that a deal remains unfavourable under the current terms of the non-binding offer. This week they sought to place pressure on Kraft to formalise their bid soon by seeking out assistance from UK authorities, according to reports.
It was suggested that Cadbury went to the U.K. Panel on Takeovers and Mergers to request an order demanding that Kraft make a formal bid with proof of financing, as uncertainty reigns about the prospect of a higher offer or a new bidder. This request could see British regulators ask Kraft to make a formal offer or leave the confectioner alone for a period of at least six months.
Never say never
“I would never say there’s not some strategic sense in these businesses coming together,” Mr Stitzer told The Wall Street Journal.
Mr Stitzer noted that “there are clear combinations of either routes to market or complementary elements of the confectionery portfolio” in Europe and the emerging markets of Brazil, Russia and China, .
He added that key shareholders in the company were adamant that the deal was not fair value.
“Their view is, keep doing what you’re doing, and in the absence of any higher value, stay focused,” Mr Stitzer advised. “If a higher bid does not materialise, I think our shareowners will have to decide whether or not the value of our plan or the value of whatever offer’s on the table is appropriate.”
A week and a half ago Cadbury’s Chairman sent a letter to their suitor arguing that Kraft’s “low growth, conglomerate business model” did not appeal to the confectioner. Such sentiments were echoed by Mr Stitzer ahead of meetings on Tuesday and Wednesday with investors in London.
Kraft boss Irene Rosenfeld will also be in London at the same conference but it is not expected that discussions between the two firms will take place.
