Cadbury Plc CEO Todd Stitzer said on Friday he did not believe Kraft's offer for the company made strategic sense, as he tried to clarify remarks he made that drew scrutiny from Britain's Takeover Panel.
Cadbury said Stitzer's remarks had been misconstrued to imply a softening of his view about a deal to create the world's largest confectioner, as the two sides await a ruling from the Takeover Panel on the timing of Kraft Foods Inc's bid.
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, a Cadbury statement said.
Stitzer was quoted as saying Kraft's 10 billion pound ($16 billion) bid made some strategic sense, according to a note from Bank of America/Merrill Lynch on Wednesday. He was described as detailing the potential benefits from a takeover and discussing industry deal valuations during a closed Merrill investor conference.
Stitzer's comments have prompted a close look from the takeover panel, even as it considers a request from Cadbury to require a firm timeline on a Kraft bid, sources close to the situation said.
The bank later moved to clarify Stitzer's remarks saying his comments on valuation were only made in the context of comparable transactions in the industry and did not imply a fair value for the business. Cadbury had contact with the panel on Wednesday with regard to some of Stitzer's remarks.
The panel considers all comments made by companies on a selective basis in a bid situation and this is likely to have delayed its decision after Cadbury went to the panel on Monday to ask it to send Kraft a put up or shut up request.
The author of the note -- U.S. consumer sales specialist Simon Archer -- is still working at the bank.
It just seems like there just hasn't been a very consistent message from Cadbury, Morningstar analyst Erin Swanson said. There's been more seesawing back and forth.
Swanson said Kraft needed to look past Stitzer's comments.
Kraft should be focusing on the underlying business, thinking about how much they are willing to pay, she said.
Kraft CEO Irene Rosenfeld declined to comment on Stitzer's latest remarks and the potential impact on the panel ruling during a discussion on world hunger in New York.
She told employees on Thursday at the group's headquarters in Northfield, Illinois, that the Cadbury deal was something we would like to do, not something that we have to do.
The situation is not the first time former takeover lawyer Stitzer has surprised investors with comments on Cadbury's strategy.
When U.S. activist investor Nelson Peltz built up a stake in Cadbury in March 2007, Stitzer bowed to Peltz's pressure and decided to split the group between confectionery and U.S. soft drinks.
Stitzer said at the time Cadbury had been working on splitting the group for over two years. But the move came as a surprise to analysts and investors after he had publicly ruled out splitting the company only six months earlier.
Kraft launched its cash and share deal for Cadbury, which was promptly rejected, on September 7. Later, Cadbury Chairman Roger Carr said it was an unappealing prospect being absorbed into Kraft's low growth conglomerate business.
The bid was valued at 10.2 billion pounds ($16.31 billion), but the fall in Kraft's share price currently puts the value of the bid at 728 pence.
Kraft was up 26 cents at $26.64 in late trading on Friday on the New York Stock Exchange. Cadbury closed up 0.7 percent at 8.042 pounds in London.
(Reporting by David Jones; additional reporting by Brad Dorfman in Chicago; editing by Sitaraman Shankar, David Cowell and Andre Grenon)