Published Date: 11 January 2010
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Buffett – the legendary investor known as the “Sage of Omaha” – used his Berkshire Hathaway investment vehicle to publicly warn Kraft not to overpay for the British confectioner last week.
Buffett owns 9.4 per cent of the US company hunting Cadbury. The move led Cadbury chairman Roger Carr to say at the weekend: “It was hugely embarrassing for Kraft to be reprimanded in public. It is very evident the real boss of Kraft lives in Omaha.”
Kraft would not comment yesterday. But one source close to the contested takeover bid said: “This really is a bit of a sideshow. Both Cadbury and Kraft have to act in the best interests of their shareholders.
“For Kraft, Buffett is a shareholder and an important one. It is really no different the company listening to his views as Cadbury listening to the views of their shareholders.”
The crossfire over Buffett’s influence at Kraft and the potential that he will limit any “material” improvement in the Kraft offer for Cadbury comes as the UK firm is due to produce a trading update for 2009 at the end of this week.
City food analysts say Cadbury is virtually certain to ramp up its previous forecasts for a 2009 operating margin of 13.3 per cent and underlying sales growth last year of about 5 per cent.
Carr, meanwhile, denied Cadbury would be tempted to over-egg the forecasts, saying management knew its reputation depended on them delivering on any public targets.
Kraft’s cash-and-shares bid is worth about 767p per Cadbury share, 11p below the target firm’s price in the market.
Several City analysts believe Kraft, led by Irene Rosenfeld, will have to increase its bid to at least 800p a share to win the battle. Under takeover rules, the American firm has until 19 January to improve the bid.
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