{"id":203296,"date":"2010-01-20T10:42:00","date_gmt":"2010-01-20T15:42:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-5912109341782593600"},"modified":"2010-01-20T10:47:42","modified_gmt":"2010-01-20T15:47:42","slug":"financial-times-buffett-hits-at-kraft%e2%80%99s-%e2%80%98bad%e2%80%99-cadbury-deal","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/203296","title":{"rendered":"FINANCIAL TIMES: Buffett hits at Kraft\u2019s \u2018bad\u2019 Cadbury deal"},"content":{"rendered":"<p><!-- AddThis Button BEGIN -->By FT Reporters <\/p>\n<p>Published: January 20 2010 15:32 | Last updated: January 20 2010 15:32<\/p>\n<p><a style=\"font-weight: bold;\" href=\"http:\/\/everythingwarrenbuffett.blogspot.com\/2010\/01\/cnbc-video-becky-quick-one-on-one-with.html\">CNBC VIDEO: Becky Quick One-On-One with Warren Buffett -21\/01\/10<\/a><\/p>\n<div class=\"ft-story-body\"><script type=\"text\/javascript\" language=\"javascript\"> function floatContent(){var paraNum = \"3\" paraNum = paraNum - 1;var tb = document.getElementById('floating-con');var nl = document.getElementById('floating-target');if(tb.getElementsByTagName(\"div\").length> 0){if (nl.getElementsByTagName(\"p\").length>= paraNum){nl.insertBefore(tb,nl.getElementsByTagName(\"p\")[paraNum]);}else {if (nl.getElementsByTagName(\"p\").length == 3){nl.insertBefore(tb,nl.getElementsByTagName(\"p\")[2]);}else {nl.insertBefore(tb,nl.getElementsByTagName(\"p\")[0]);}}}}<\/script><\/p>\n<div class=\"clearfix\" id=\"floating-target\">\n<p>Warren Buffett, the billionaire investor who is the largest shareholder in <b><a symbol=\"us:KFT\" href=\"http:\/\/markets.ft.com\/tearsheets\/performance.asp?s=us:KFT\">Kraft<\/a><\/b>, on Wednesday criticised the US food group\u2019s <a class=\"bodystrong\" href=\"http:\/\/www.ft.com\/indepth\/cadbury-kraft\">\u00a311.6bn agreement to buy Cadbury <\/a>as \u201ca bad deal\u201d.<\/p>\n<p><a href=\"http:\/\/everythingwarrenbuffett.blogspot.com\/2010\/01\/cnbc-warren-buffett-i-would-have-voted.html\">Mr Buffett told <\/a><a class=\"bodystrong\" href=\"http:\/\/everythingwarrenbuffett.blogspot.com\/2010\/01\/cnbc-warren-buffett-i-would-have-voted.html\">CNBC<\/a><a href=\"http:\/\/everythingwarrenbuffett.blogspot.com\/2010\/01\/cnbc-warren-buffett-i-would-have-voted.html\">,<\/a> the US business television network, that he had \u201ca lot of doubts\u201d over the <b><a symbol=\"uk:CBRY\" href=\"http:\/\/markets.ft.com\/tearsheets\/performance.asp?s=uk:CBRY\">Cadbury <\/a><\/b>purchase. He said he would have voted against the deal had Kraft sought shareholder approval. <\/p>\n<p>Kraft investors will not have the chance to vote on the deal, which involves the US group issuing 265m new shares, equivalent to about 18 per cent of its existing share capital, because that is below the 20 per cent level at which shareholder approval is required. <\/p>\n<p>Mr Buffett, who holds more than 9 per cent of Kraft, said the company was worth more than its current stock price \u2013 down 2 per cent at $28.72 in early Wall Street trading on Wednesday \u2013 and that its use of stock in the Cadbury deal was \u201cvery expensive currency\u201d. <\/p>\n<p>However, the legendary investor \u2013 known as the Sage of Omaha \u2013 dismissed a suggestion that he sell his Kraft stake to show his unhappiness with the Cadbury deal. He described Irene Rosenfeld, Kraft chief executive, as a \u201dgood operator\u201d and a \u201dgood person\u201d, adding that has \u201dcordial relations\u201d with her despite their \u201ddifference of opinion\u201d. <\/p>\n<p>Mr Buffett had earlier this month called on Kraft investors to <a class=\"bodystrong\" href=\"http:\/\/www.ft.com\/cms\/s\/0\/b8ede3c4-fa62-11de-beed-00144feab49a.html\">oppose Kraft\u2019s plan <\/a>to issue as many as 370m shares to fund its hostile takeover of Cadbury.<\/p>\n<p>In the event, Kraft avoided such a large share issue by agreeing to sell its pizza business to Nestl\u00e9 of Switzerland for $3.7bn to help fund its cash-and-stock bid for Cadbury. But Mr Buffett also questioned that deal, saying it had been done in \u201can enormously tax-inefficient way\u201d. <\/p>\n<p>Ms Rosenfeld on Tuesday said the Cadbury deal would \u201ctransform our portfolio and accelerate long-term growth from 4 per cent to 5 per cent.\u201d It would also help Kraft increase its long-term earnings per share growth from the 7-9 per cent range to the 9-11 per cent range, she said. <\/p>\n<p>The US food group finally secured Cadbury\u2019s backing for its hostile approach on Tuesday after raising its offer to 850p a share, ending five months of hostile relations after Kraft made an unsolicited bid in late August. The combined company would rank alongside privately-held Mars as one of the world\u2019s biggest confectionery groups.<\/p>\n<p>Separately, Fitch, the credit ratings agency, on Wednesday downgraded Kraft by one notch to BBB minus, the lowest investment grade, citing \u201cthe anticipated increase in financial leverage of the combined Kraft\/Cadbury\u201d. <\/p>\n<p>Rival agency Standard &amp; Poor\u2019s had earlier said it was maintaining Kraft\u2019s rating at A-minus but was keeping it on on Creditwatch Negative, holding out the possibility of a cut. Moody\u2019s said it was likely to keep Kraft at investment grade, but the rating was under review for possible downgrade.<\/p>\n<p>The Cadbury deal will push Kraft\u2019s debt pile from $20bn to more than $30bn once it has taken on $9.5bn of debt to fund the cash portion of the offer and assumed more than $3bn in Cadbury debt.<\/p>\n<p>Ms Rosenfeld said on Tuesday that she did not expect Kraft to be downgraded, given that the expected strong cash flow from the combined businesses would lower its leverage ratio to three times within 18-24 months.<\/p>\n<p><a name=\"comments\"><span style=\"font-weight: bold;\">Share Investor Links<\/span><\/a><a name=\"comments\"><\/a><\/p>\n<p><a href=\"http:\/\/www.shareinvestorblog.com\/\">Share Investor Blog<\/a> &#8211; Stockmarket &amp; Business commentary<br \/><a href=\"http:\/\/shareinvestornz.blogspot.com\/2007\/02\/new-zealand-business-news.html\">Share Investor New Zealand Business News<\/a>&#8211; Get more business news<br \/>Discuss this topic @<a href=\"http:\/\/www.shareinvestorforum.com\/\"> Share Investor Forum<\/a> &#8211; <a href=\"http:\/\/shareinvestorforum.com\/ucp.php?mode=register&amp;sid=450a61250472e03fa25c205c9c1723f1\"><strong>Register<strong><\/strong><\/strong><\/a> free<br \/><a href=\"http:\/\/www.currency-market.blogspot.com\/\">Share Investor&#8217;s Daily Forex Updates<\/a><\/p>\n<p><span style=\"font-weight: bold;\">Recommended Amazon Reading<\/span><\/p>\n<table id=\"searchResults\" cellspacing=\"0\">\n<tbody>\n<tr class=\"clsOdd\">\n<td class=\"tdimage\"><a href=\"http:\/\/astore.amazon.com\/shareinvestorbookstore-20\/detail\/0553384619\"><img decoding=\"async\" src=\"http:\/\/ecx.images-amazon.com\/images\/I\/51hlhRX908L._SL75_.jpg\" alt=\"The Snowball: Warren Buffett and the Business of Life\" \/><\/a><\/td>\n<td class=\"tddescription\"><a href=\"http:\/\/astore.amazon.com\/shareinvestorbookstore-20\/detail\/0553384619\">The Snowball: Warren Buffett and the Business of Life<\/a> by <span class=\"by\">Alice Schroeder<\/span><br \/>   Buy new:        $13.60       \/ Used from:        $11.85<br \/><span class=\"availability\">Usually ships in 24 hours<\/span><\/td>\n<\/tr>\n<tr class=\"clsEven\">\n<td class=\"tdimage\"><a href=\"http:\/\/astore.amazon.com\/shareinvestorbookstore-20\/detail\/0060555661\"><img decoding=\"async\" src=\"http:\/\/ecx.images-amazon.com\/images\/I\/41rcIrKhYiL._SL75_.jpg\" alt=\"The Intelligent Investor: The Definitive Book on Value Investing. 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Mr Buffett told [&hellip;]<\/p>\n","protected":false},"author":833,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-203296","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/203296","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/833"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=203296"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/203296\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=203296"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=203296"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=203296"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}