Stitz-up at Merrill Lynch?

September 25, 2009

Was it a gaffe or was the poor man misquoted? We certainly have two very different accounts of Todd Stitzer’s contribution to a closed conference at Merrill Lynch on 22 September. Maybe it would be better if these sort of briefings just didn’t take place.

According to a Merrill specialist salesman, who jotted down his remarks, Cadbury’s chief executive devoted his entire performance to sharing some thoughts about Kraft’s bid proposal. This was a pretty sensitive subject to pick but, hey, these were serious investors. So he allegedly indicated the possible exit price and the scale of the possible synergies from the deal. The salesman noted that:

Todd admitted that there is some strategic sense in combining the two companies and he doesn’t expect Kraft to walk away, so he said his job is to get as much value as possible.

Stitzer has now clarified his words, most likely at the behest of the Takeover Panel. This statement comes straight out of the circumlocution office and reads: 

For the avoidance of doubt, Mr Stitzer does not believe that Kraft’s proposal makes strategic or financial sense for Cadbury and his comments should not be interpreted in any other way.

 A spokesman added that Stitzer had been “seriously misquoted”.


Anyway, the market doesn’t seem to be in any doubt about which account it believes. Since the Merrill note came out, the share price has strengthened by about 1.6 per cent.

But there would have been no confusion at all had Stitzer made his remarks publicly through a webcam, or issued a transcript of what he would say. And there’s no reason why he shouldn’t these days.

Just to clarify, out of interest, Cadbury has refused to issue a transcript of what he said.

Closed sessions with investors and analysts may be popular with big investment banks, which use them as a method of justifying the commissions they charge fund managers. But the very fact that they have a monetary value should give one pause. Why would any investor pay for such a service unless it gave them an informational advantage? True, what Stitzer said may not have constituted the sort of juicy inside info that gets you darting into the street with a pay-as-you-go phone, but it confers an advantage nonetheless.

It all seems so unnecessary. If a company has something of interest to say, here’s a modest suggestion. Why not say it openly?

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