Warren Buffett Quotes

Warren Buffett is almost as famous for his quotes and one-liners as for his investing - see this selection of Warren Buffett Quotes on Life

Thursday, 21 January 2010

Warren Buffett Slams Kraft Cadbury Merger

Cadburys Flake

Why is Warren Buffett Not Happy With Kraft Bid for Cadbury?

Warren Buffett is not happy about the Kraft Cadbury deal and he said so on CNBC in no uncertain terms. He is normally pretty quiet as an investor but this deal seems to have really got his goat. Berkshire Hathaway owns 9.4% of Kraft and yet has no say in whether this deal should go through or not. He said however, that if he had a vote he would vote NO!

Mr Buffett said Kraft had made a mistake pursuing UK chocolate producer Cadbury - famous for its flakes (and its flake ads.).

Speaking to Becky Quick on CNBC Warren Buffett said he "has a lot of doubts" about the takeover. Kraft will be paying 500 pence in cash plus 0.1874 of new Kraft shares for a Cadbury share.

Mr Buffett also thinks Kraft's decision to sell its pizza business to Nestle in order to raise cash for the Cadbury bid, was a mistake. He said it was "enormously tax-inefficient" and cut the actual value of the deal from $US3.7 billion ($4 billion) to $US2.5 billion. The impression he gave was that he was not too impressed with the intelligence or business sense of the Kraft board.

As Warren Buffett has 9.4% of Kraft shares under his control his remarks cost him quite a lot of money as the Kraft shares fell immediately after he gave his opinion and have fallen around 3% since his remarks. Could it be that this is what he wants ? If he is considering buying more Kraft shares, then a lower price makes sense. But maybe this is not the way his mind works.

Warren Buffett is known for his witty one-liners - see Warren Buffett Quotes