Buffett Says Kraft Takeover of Cadbury is a Bad Deal
Warren Buffett, the largest shareholder in Kraft Foods, as well as the second richest man in the world, condemned the company’s $19.4 billion (£11.9 billion) takeover bid of Cadbury, calling it a bad deal on Wednesday. He says that he feels poor because of it.
In an interview a day after the takeover was announced, Buffett said that he has a lot of doubts about the agreement. Kraft is using stock that their directors say is undervalued significantly, he continued, but he won’t sell his stake since it would be too expensive with the shares not being valued enough. A Kraft spokesman said that they respect their shareholders’ opinions, but they believe this deal is good for them.
Despite being so opposed to the deal, Buffett did back Kraft’s chairman and CEO, Irene Rosenfeld, saying that she has done a good job. He continued that there is nothing more than a difference of opinion about this deal between the two. They just simply disagree, he added, saying that she is a perfectly decent person, but he doesn’t want her to make the deal.
Rosenfeld has been trying to take over Cadbury for the last several months, and it wasn’t until Monday that she finally convinced the candy company’s management to agree to a deal, for which she increased the cash and decreased the share components of the offer. However, Kraft is also having to sell their North American pizza business to Nestle for $3.7 billion this month in order to finance the Cadbury deal. Of course, Buffett has criticized this as well.
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