Warren Buffett has come out opposing Kraft's hostile takeover bid of Cadbury. Buffett is the largest shareholder of Kraft through his company Berkshire Hathaway. Buffett has scuttled deals in the past that he didn't think were good deals for shareholders: he sunk Coke's proposed takeover of Quaker Oats.
Buffett's Berkshire Hathaway Inc., Kraft's biggest shareholder, urged fellow investors to oppose a plan to issue as many as 370 million shares to help buy the U.K.-based candy maker. Kraft Chief Executive Officer Irene Rosenfeld is seeking a "blank check" for the deal, Berkshire said yesterday.
"I think Buffett's got it nailed," said Donald Yacktman, founder of Yacktman Asset Management Co., which holds Kraft shares. "Kraft is hemmed in -- there's only so much they’re going to be able to do to make this acquisition."
Buffett, who has said shareholders must act like owners, urged caution in negotiations after Cadbury rejected Kraft’s bid of 10.6 billion pounds ($17 billion). In publicly asking others to join him, the 79-year-old Berkshire chairman is drawing on his power as a 9.4 percent owner of Kraft and his standing in financial markets as the world’s preeminent investor.
Berkshire said it may support a Cadbury takeover if it concludes this month that the final offer "does not destroy value for Kraft shareholders." Buffett's assistant, Carrie Kizer, said the company had no comment.
"If he says no, everybody else is going to pile on and say no too," said Justin Fuller, a partner at Midway Capital Research & Management who runs the buffettologist.com Web site.
Buffett's public statement could be a nail in the coffin for the takeover bid, much to the annoyance of the Kraft board of directors. Many Kraft shareholders will go along with whatever Buffett recommends.
Warren Buffett has 
