Britain's takeover watchdog is reviewing private comments by Cadbury Plc's chief about the company's valuation amid a potential takeover by Kraft Foods Inc, saying Todd Stitzer had stoked uncertainty in the market, the Financial Times reported.

Citing people familiar with the matter, the FT reported that the UK Takeover Panel was concerned that Stitzer's remarks, made privately to investors and reported by Bank of America analysts, were unclear.

Companies subject to takeovers are prohibited from disclosing their views on bids selectively, the newspaper added.

Cadbury had earlier rebuffed Kraft's bid as too low. But in private comments, Stitzer detailed potential benefits from a takeover by Kraft and discussed valuations with investors. Experts say his remarks could set a pricing framework for talks between the British confectioner and the world's No. 2 food company.

Kraft's 10 billion pound ($16.44 billion) approach makes some strategic sense, Stitzer said, according to a note from Bank of America/Merrill Lynch on Wednesday. [ID:nLN505029]

Past deals in the industry have been agreed at higher multiples than Kraft's offer, Stitzer said, referring to a multiple of 15 times earnings before interest, taxes, depreciation and amortization (EBITDA), according to the note.

Credit Suisse estimates that Kraft's offer values Cadbury at about 12.5 times 2009 EBIDTA.

Stitzer also outlined potential areas of revenue synergies with Kraft in markets like Germany, China and Brazil, according to the note.

Stitzer made his comments this week at a two-day Bank of America/Merrill Lynch conference in London, after which a sales specialist for the bank published his remarks.

A Cadbury spokesman stressed on Wednesday that Stitzer's comments were theoretical and did not signal a shift in the company's position on Kraft's proposal.

Cadbury Chairman Roger Carr said in a letter to Kraft CEO Irene Rosenfeld dated Sept. 12 that being absorbed into Kraft's low-growth conglomerate business model would be an unappealing prospect.

A Kraft acquisition of Cadbury would create a giant confectioner with about 15 percent of the global marketplace, rivaling industry leader Mars Inc.

Cadbury had asked the panel, an independent body that supervises takeovers, to set a time limit on Kraft's offer and force Kraft to put in a formal bid within a certain timeframe or walk away.

Kraft launched its bid for Cadbury on Sept. 7 in a deal to create the world's biggest confectionary group, bringing Cadbury's Dairy Milk chocolate and Trident gum together with Kraft's Oreo biscuits and Milka chocolate.

The Takeover Panel, established in 1968, supervises and regulates takeovers and aims to ensure fair treatment for all shareholders in takeover bids. (Reporting by Edwin Chan; Editing by Gary Hill)

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