Wed Sep 16, 2009 1:52pm EDT
By David Jones
LONDON (Reuters) - Cadbury (CBRY.L) is upbeat about growth prospects beyond the end of its restructuring plan in 2011, as it looks to defend itself against a multibillion-pound bid from U.S. food giant Kraft Foods Inc (KFT.N), Chief Executive Todd Stitzer said.
Stitzer told a Sanford Bernstein conference on Wednesday he was confident that Cadbury has more to deliver, but said he was restricted on what he could say within British takeover rules after last week's 9.7 billion pound ($16 billion) approach from Kraft.
He answered questions from investors for about 15 minutes after his speech to around 300 attendees at London's Grosvenor House hotel, but there was no direct mention of the Kraft bid.
"I believe we have created a dynamic business platform with a compelling strategy in the global confectionery market," he told the packed meeting.
He said the company was confident of meeting its financial goals by the end of its four-year "Vision into Action" plan by 2011, and said he was confident for growth beyond that date.
"Looking beyond 2011, we will be well positioned to capitalized on new revenue growth opportunities, sustain best in class margins, while reinvesting in further efficiency initiatives," he said.
On September 7, Kraft launched its cash-and-stock bid for Cadbury, which was initially worth 745 pence a share, or 10.2 billion pounds. But the fall in Kraft shares and a weaker dollar has cut this to 709 pence, or about 9.7 billion pounds.
Cadbury immediately rejected the bid as undervaluing the group, and Chairman Roger Carr said over the weekend that being absorbed into Kraft's "low-growth conglomerate business" was an "unappealing prospect."
Most analysts expect Kraft will need a bid of 850 pence to 900 pence a share to win Cadbury, whose stock was off nearly 1 percent at 789 pence after going ex-dividend.
Kraft is assembling financing and will probably launch a formal offer for Cadbury within the next few weeks, rather than days, sources familiar with the situation said.
The time required to pull together funding will allow Kraft to gauge whether rival bidders will emerge, which is seen as unlikely, and whether it will stand firm with its existing price, said the sources, who were not authorized to speak with the media.
Billionaire investor Warren Buffett, whose Berkshire Hathaway Inc (BRKa.N) is Kraft's largest shareholder, told CNBC on Wednesday that the company had "a lot to do" to justify the price offered for Cadbury.
Buffett said investors undervalued Kraft's stock, so it was using a weak currency to pay full value for Cadbury.
Credit analysts have also said that it would be difficult for Kraft to use more cash in its bid and still maintain the investment-grade credit rating it wants to keep.Kraft is looking to create the world's largest confectionery group with its bid, bringing together Cadbury's Dairy Milk chocolate and Trident gum with its own Milka chocolate and Oreo biscuits, and cutting combined costs by $625 million annually.
In 2007, Stitzer launched his 2008-2011 "Vision into Action" plan to drive underlying annual sales up 4 percent to 6 percent and operating margins to a mid-teen percentage by 2011, while also cutting 15 percent from its global workforce of 50,000.
Despite the global downturn, Cadbury saw first-half 2009 sales rise 4 percent and looks for a similar increase for the full year, while it is on track to met its margin target after a 11.9 percent figure was recorded in 2008.
(Reporting by David Jones and Victoria Howley in London, Brad Dorfman in Chicago and Jessica Hall in Philadelphia; editing by Rupert Winchester )Related Links
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