Cadbury's Carr takes hard line in Kraft battle

By David Jones

LONDON (Reuters) - Cadbury (CBRY.L) chairman Roger Carr has emerged victorious from many bid battles but if U.S. food giant Kraft (KFT.N) ups its multi-billion pound offer the tough-talking takeover veteran will be under pressure to soften his stance.

Carr squared up to Kraft early in the bid battle with an abrasive letter to Kraft's CEO and a request to the UK Takeover Panel to force Kraft to formalize its bid.

Carr has plenty of takeover battle experience, fighting off bids as chairman of Chubb and Mitchells & Butlers (M&B) (MAB.L), and only giving up in 2000 as chairman of Thames Water when he had extracted a high price from Germany utility RWE.

Carr agreed a friendly 4.3 billion pound takeover of Thames Water, at a price 43 percent above Thames' average share price over the previous month and included a dividend. Both sides described the deal as "generous".

His ruthless and unsentimental approach to business stretches back over 30 years, buying and selling companies throughout his career with the mantra of shareholder value at the very core of his decision making.

He led the "hit squad" at conglomerate Williams in his early career, swooping in to turn around underperforming acquisitions, but the low point came as pub group M&B under his chairmanship lost millions in catastrophic financial bets.

Most analysts expect Kraft to come back with an improved bid after its 745 pence or 10.2 billion pound offer in early September, and a offer of 800p is likely to test Carr's resolve of remaining independent, when pitched against his duty to his shareholders.

Britain's Takeover Panel has given Kraft until November 9 to come up with a formal bid and analysts doubt there will be a white knight bidder.

"Carr has been very opposed to Kraft publicly, but if the bid price started with an 8, he would be almost compelled to talk," said one source with knowledge of the situation.

The approach currently values Cadbury at 720p against a current share price of 787p, and while analysts say Cadbury is worth 850-900p, sources say the Cadbury board would come under pressure from shareholders if the bid is increased.

Sources say Carr brings an almost military zeal to the boardroom with a disciplined mind capable of giving a focus to complex issues. "He is certainly very effective, very capable, but I'm not sure if I would trust him," said one source who has worked with him in the past.

Carr, 62, has been a director of Cadbury Schweppes since January 2001, moved to deputy chairman in May 2003 and was appointed chairman in July 2008, two months after the demerger of its drinks business left Cadbury Plc a pure confectioner.

He has been firm on rejecting Kraft, while his CEO and Cadbury veteran Todd Stitzer was reported to be softening his stance, but subsequently Stitzer said he did not believe the bid made strategic or financial sense.

Carr's move to become Cadbury chairman surprised many investors as his last role saw him presiding over massive losses at M&B that wiped out two years of profits and lost him his job.

The 2,000-strong pubs and bars group used financial bets to form a hedge position in a 4.5 billion pound deal to sell off most of its property freeholds, but the deal collapsed as a victim of the credit crunch in the summer of 2007.