Cadbury CEO admits some synergies with Kraft: report

SAN FRANCISCO (Reuters) - The head of confectioner Cadbury PLC CBRY.L, which is facing a possible takeover by U.S. food giant Kraft Foods Inc (KFT.N), said there were some "complementary elements" in the two companies' portfolios, according to a Wall Street Journal report.

Still, Cadbury Chief Executive Todd Stitzer, in an interview with the newspaper, said the British company's shareholders still reject the deal at the 9.7 billion pound ($16 billion) price offered by Kraft.

But Stitzer's comments to the paper suggested some softening in tone from Cadbury, which has rejected the potential deal as undervaluing the company.

"I would never say there's not some strategic sense in these businesses coming together," Stitzer told the Journal.

Also on Monday, the Financial Times reported that Cadbury had asked the U.K. Takeover Panel, a body that regulates takeovers, to ask Kraft to make a formal proposal or walk away for six months. The paper sourced its information to people close to the matter.

Stitzer's comments to the Journal included the criticism, voiced earlier this month by other Cadbury executives, that the confectioner's business does not mesh well with the Kraft "conglomerate."

"I completely respect the fact that we would be attractive to someone else, but the world of large conglomerates has passed," Stitzer told the paper.

But Stitzer said that in areas such as Europe, and emerging markets like Brazil, Russia and China there were "clear combinations of either routes to market or complementary elements of the confectionery portfolio."

Cadbury, the maker of Dairy Milk chocolate and Trident gum, has rejected the proposal as undervaluing the firm, and sources have recently said that it will take weeks before Kraft could potentially make another move.

On September 7, Kraft launched a cash-and-stock bid for Cadbury that was originally worth 10.2 billion pounds, or 745 pence per share. But a drop in Kraft shares and a weaker dollar has subsequently lowered that sum to about 709 pence.

Such a takeover would create the world's largest confectionery group.

Cadbury's Chairman, Roger Carr, has called the prospect of merging into Kraft's portfolio of brands "unappealing."

"Under your proposal, Cadbury would be absorbed into Kraft's low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company," Carr wrote in a recent letter to Kraft CEO Irene Rosenfeld.

Kraft, the world's second-largest food company, has stated it would not need to sell off any of its high-profile operations like Oscar Mayer hot dogs nor Maxwell House coffee in order to fund its bid.

And analysts believe the company could, if needed, bid as high as 12.3 billion pounds ($20.1 billion) to seal the deal, all without losing its investment grade rating on its debt.

Cadbury is some eighteen months into a four-year plan designed to cut costs and improve performance. The plan includes targets for annual sales growth of 4 to 6 percent, mid-teen percentage operating margins by 2011, strong dividend growth and better returns on capital.

A Kraft spokeswoman declined comment.

(Reporting by Alexandria Sage and Bradley Dorfman; Editing by Steve Orlofsky)