{"id":146536,"date":"2010-01-06T16:48:00","date_gmt":"2010-01-06T21:48:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-2478984511431953012"},"modified":"2010-01-06T16:49:55","modified_gmt":"2010-01-06T21:49:55","slug":"fortune-buffett-and-kraft-three-truths","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/146536","title":{"rendered":"FORTUNE: Buffett and Kraft: Three truths"},"content":{"rendered":"

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Rarely does a rebuff from Warren Buffett do so much good. Yesterday, when the Oracle of Omaha, who is Kraft Foods\u2019 largest shareholder, voted against <\/a>the company\u2019s issuance of stock to buy Cadbury (CBY<\/a>), Kraft (KFT<\/a>) stock went up 4.9%. Cadbury fell, on the logic that by tightening the leash on Irene Rosenfeld, Kraft\u2019s CEO, she wouldn\u2019t be able to sweeten Kraft\u2019s price for the British-based candy giant.<\/p>\n

The tug-of-wars\u2013between Kraft and Cadbury and Rosenfeld and Buffett\u2013are fascinating to watch. Having known both Buffett and Rosenfeld for many years, I\u2019ll share three quick thoughts:<\/p>\n

1. It\u2019s really not so surprising that Buffett reined in Kraft\u2019s ability to raise its bid for Cadbury. Buffett has a long history of making bids and sticking to them. Of course, this is Kraft\u2019s acquisition, not Berkshire Hathaway\u2019s (BRKA<\/a>). But since Berkshire owns 9.4% of Kraft, clearly Buffett\u2019s vote matters. And so does his advice.<\/p>\n

2. Kraft\u2019s Irene Rosenfeld is one of the most disciplined bosses around. She was trained and mentored decades ago by Jim Kilts, who ran Kraft and later Gillette, which he sold to Procter & Gamble (PG<\/a>) in 2005. Buffett was a big owner of Gillette stock and a longtime fan of the Kilts\u2019 style of leadership\u2013aggressive but pragmatic, forthright but not flashy. That\u2019s Rosenfeld\u2019s style too.<\/p>\n

3. An oddity in the latest twist in this four-month takeover drama: Kraft\u2019s response to Buffett\u2019s vote against issuing new shares. In a statement yesterday, Kraft called its stock \u201cundervalued.\u201d If Kraft stock really is worth more than the current price\u2013just under $29\u2013isn\u2019t issuing new shares an unduly expensive way to pay for a global candy prize?<\/p>\n

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