The winners: Management duo in line for bumper pay packet from takeover deal

Nick Clark
Wednesday 20 January 2010 01:00

As Todd Stitzer agreed the sale of Cadbury to a company he had once labelled a "lumbering corporate monolith" in the early hours of yesterday morning, he had the consolation that the deal could see him take home £20m.

After the two companies announced the deal giving up Cadbury's independence, sparking outrage from UK investors, analysts were predicting that Mr Stitzer would leave the company he joined 27 years ago shortly after the deal was done. One said: "It's unlikely any of the management team will be staying around. Partly because the deal process wasn't that friendly and maybe, at 57, his age could be a factor; but Mr Stitzer won't be around for long."

Mr Stitzer, who was appointed chief executive of Cadbury in 2003, will be well rewarded though. Beyond his total pay packet, which was £4m last year, the shares he has built up over his career will be worth almost £7m. Sources close to the company said the sum could rise to £20m with the additional long-term bonus shares, and share options he would likely receive.

Cadbury chairman Roger Carr, who also holds the equivalent role at Centrica, has over 40,000 shares in the group, according to the latest annual report. These would be worth £354,000 at the offer price. Kraft's head, Irene Rosenfeld, refused to be drawn on the future Cadbury's management, saying: "It's a little premature to be commenting." She added: "I will say there's lots of talent at Cadbury. Our intent is to work together to get a best of both into the new company."

Chris Mills, a partner at consultancy PIPC, who works on post-merger integrations, said: "The virulence with which Cadbury greeted the original offer means that there are likely to be issues between the management teams when it comes to determining future strategy and, in particular, operational decisions that directly affect the UK company."

Their departure is not a foregone conclusion, one source close to the deal said, as "part of the reason Kraft was drawn to the deal was the management team and the performance they had achieved".

Even bigger winners are likely to be the investment banking advisers. Cadbury is thought to have paid up to $56m (£34m) to the three banks working on the deal, Goldman Sachs, Morgan Stanley and UBS, according to Thomson Reuters/Freeman Consulting.

Advisory fees by Kraft are expected to be as high as $58m, to be split between six banks: Barclays, Citigroup, Centerview Partners, Deutsche Bank, Credit Suisse and lead adviser Lazard, whose offices round the corner from the Ritz Hotel in London, hosted the late-night negotiations. The estimated fees for Kraft's $9.2bn bridge loan were up to $32m.

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