Warren Buffett slates Cadbury takeover
Warren Buffett, the well-known investment guru, has today criticised Kraft Foods over the price it was forced to pay for UK outfit Cadbury. The company yesterday agreed an improved £11.9 billion offer with Cadbury although while Buffett believes it is a "bad deal" he has been particularly critical of the increase in the cash element which will result in higher debts for Kraft Foods.
Buffett's Berkshire Hathaway investment operation holds a 9.4% stake of Kraft Foods and is the second largest shareholder in the company. While the shares were down over 2% today on the back of criticism of the Cadbury deal, Buffett has confirmed he will not be selling down his stake in the operation and believes that Kraft Foods itself is still undervalued. Indeed he suggested that if shareholders had been given the option of voting on the deal, this was diverted due to a reduction in the number of new shares to be issued, he would have voted against the deal.
There has been criticism on both sides of the Atlantic with regards to the price paid for Cadbury with Kraft Foods shareholders wary of the companies increased debt and Cadbury shareholders concerned the company may well have been sold on the cheap. Whatever the reality there is no doubt this particular takeover saga has attracted many different comments and many different views over the last few months. Unfortunately for those looking for a higher price for their Cadbury shares it seems unlikely the recommended offer will be blocked and it should go through in the short term.
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