London: Cadbury chief executive Todd Stitzer believes a 20% higher bid from Kraft of about £12.2 billion ($19.93 billion) would be a fair price, according to a note obtained by Reuters.
He also told investors that he does not expect Kraft to walk away from its proposed acquisition and sees some strategic sense in combining the two companies, while there would be revenue synergies from such a deal.
“On price, Todd seemed to admit that a 15x EBITDA multiple would be a fair price,” the note by Bank of America/Merrill Lynch sales specialist Simon Archer said.
Analysts say a multiple at that level puts the price for Cadbury around 900 pence per share, valuing the entire company at around £12.2 billion ($20.4 billion), up from Kraft’s initial bid of 745 pence per share, or £10.2 billion.
Cadbury shares were steady at 788-1/2 pence at 0925 GMT while the current Kraft cash and share offer is valued at around 718 pence reflecting the recent fall in Kraft shares.
Stitzer also outlined areas where synergies might be found to bolster Kraft’s “modest” $625 million annual synergies target, the note said. He saw revenue synergies between Cadbury and Kraft in countries such as Germany, China and Brazil.
Stitzer and Kraft’s boss Irene Rosenfeld are attending the two-day Bank of America/Merrill Lynch Global Consumer and Retail Conference in London, starting Tuesday, where they are speaking to investors in separate sessions.