Stitzer leans on lawyer skills for Kraft defense

Cadbury's chocolate bars in a file photo.

LONDON (Reuters) - Cadbury chief executive Todd Stitzer will have to draw on all his skills as a takeover lawyer when he aims to convince a host of investors on Wednesday that his group can thrive without being bought by Kraft.

Stitzer faces investors at a Stanford Bernstein conference where he is likely to be quizzed on his defense strategy for the maker of Dairy Milk chocolate, Trident gum and Stitzer's favorite Cadbury product, Maynards wine gums.

American-born, Harvard-educated Stitzer immediately rejected the 10.2 billion pound ($17 billion) Kraft approach last week and will seek to convince his shareholders that Cadbury is better off alone than in a massive U.S. food group and should only succumb if the bid is too good to be true.

That isn't the case at the moment with Kraft's opening shot 10 percent below the Cadbury share price and Stitzer is not about to throw in the towel on his six-year mission to make it the biggest and best confectionery group in the world.

"He will put up a good fight, I am more positive than the average over Stitzer. He will be judged by history, but he deserves a lot a credit for his work over the last two years," said analyst Martin Deboo at Investec Securities.

Other analysts have more negative views on Stitzer over the poor performance of Cadbury in 2004-2006 and the confusion over a demerger of its drinks unit, but even they admit the Adams deal and results after demerger have added value for shareholders.

The 57-year-old Stitzer has spent his last 26 years at the British sweetmaker where it was his deal-making skills masterminding the acquisition of Adams in 2003 that propelled him into the top seat the following year.

His experience as a New York mergers and acquisitions lawyer came in useful as he built up the world's biggest confectionery group, but he was always looking over his shoulders at food giants with confectionery like Nestle and Kraft.

ONE MORE CHALLENGE

After six years in which soaring cocoa prices, salmonella scares and fraud in Nigeria have threatened to knock him off course, Stitzer is unwilling to give up easily leading the 185-year ago company founded by the philanthropic Cadbury Quaker family.

Stitzer, who worked as a part-time tennis coach to help pay his way through college, has the fighting spirit to organize a spirited defense but is pitted against another food industry veteran Irene Rosenfeld, 56, tasked with reviving Kraft.

The first non-Briton to run Cadbury, Stitzer has made the group a pure-play confectioner after demerging the Dr Pepper/Snapple U.S. drinks unit, and chocolate's attributes as a comfort snack have lifted confectionery in the recession.

Kraft's cash and share bid was initially worth 745 pence a Cadbury share, or 10.2 billion pounds, with 60 percent of the price in equity, but the fall in Kraft shares and the dollar has seen the value fall to 711p, or around 9.7 billion pounds.

With most analysts and investors looking at a winning bid of 850 to 900p compared to a Cadbury share price of 790p at 1415 GMT and a bigger slice of cash than Kraft paper, Stitzer has the support of investors in looking for a better deal.

Stitzer joined Cadbury in North America in 1983 as a corporate lawyer after practicing mergers and acquisitions law at New York firm Lord Day & Lord, moving through the ranks to become head of its Dr Pepper/Seven UP drinks unit in 1997.

Later, as strategy director, he masterminded the acquisition of Adams in March 2003 for $4.2 billion, transforming Cadbury into the top global sweets maker with Trident gum and Halls cough sweets.

He became chief executive in May of that year and launched his "Fuel for Growth" 2003-2007 strategy to cut costs and drive overall performance, but cocoa prices, salmonella and Nigeria forced it to miss its margin targets for 2005 and 2006 and analysts judged the strategy as a failure.

But Stitzer was already working on his next plan "Vision into Action" 2008-2011, and the group is still on target to see annual sales grow 4-6 percent and operating margin to rise to a mid-teen percentage by 2011 from 11.9 percent in 2008.

U.S. activist investor Nelson Peltz built up a stake in Cadbury in March 2007, and within days Stitzer bowed to Peltz's pressure and decided to split the group between confectionery and U.S. soft drinks.

Stitzer said the group had been working on splitting the group for over two years, but the move came as a surprise to analysts and investors as only in October 2006 had he stated publicly that he had "ruled out" splitting the company.

The split attracted rumors of bid interest in Cadbury, heightened when privately owned Mars bought Wrigley in the same year to knock Cadbury off the top spot in world confectionery.

Some analysts said this Mars-Wrigley deal sealed the fate of Cadbury and it would have to become part of a bigger group.

($1=.6006 Pound) (Reporting by David Jones; editing by Sitaraman Shankar)