Cadbury clarifies position on Kraft offer

Posted by Daniel Palmer on 28th September 2009

Confectioner Cadbury has said comments made by their CEO about the Kraft offer making strategic sense were “misconstrued” last week, with his discussion with investors not softening the view that the deal is unsuitable.

“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 advised in a statement. “Cadbury’s position in relation to Kraft’s proposal remains precisely as set out in the letter to Kraft issued on 12 September.”

The letter highlighted that Cadbury believes the best growth path for shareholders is one where the company remains independent, arguing that they did not want to be part of Kraft’s “low growth” conglomerate structure.

Kraft boss Irene Rosenfeld has maintained that the company is still intent on winning the support of Cadbury, with the deal “something we would like to do, not something we have to do”.

In an interview with The Sunday Times over the weekend Rosenfeld may have inflamed the situation, however, by accusing Mr Stitzer of failing to “do the math quite accurately” in regard to his assertions that the independent growth strategy would deliver better returns to shareholders.

Fortunately, the saga is unlikely to roll on too much longer without an official bid being made from Kraft after Cadbury went to Britain’s Takeover Panel to request a firm timeline for any bid. This may force a binding proposal within a couple of weeks, with a failure to act within any timeline set by the Panel leaving Kraft unable to make an offer to Cadbury for a period of six months.