His comments, in an interview with CNBC on Wednesday, coincided with a
downgrade of Kraft’s credit rating by Fitch and sent shares in the company
lower.
The legendary investor said: "If I had a chance to vote on this, I’d vote
no…I have a lot of doubts about this deal."
Shareholders
Some Kraft and Cadbury shareholders voiced support for the takeover, but
others, such as Legal & General Investment Management, were disappointed
by the bid, which values the confectioner at 850p per share.
Mr Buffett, who holds more than 9 per cent of Kraft, said he felt "poor"
following the Cadbury deal because it came with $1.3bn (£798m) of
reorganisation costs and $390m of deal fees. He was also unhappy with the
sale of Kraft’s "very fine pizza business" this month to Nestlé.
This month, he called Kraft’s use of stock in the Cadbury deal "very expensive
currency", suggesting that Kraft was worth more than its current share
price, which was down 2.5 per cent at $28.68 in afternoon trading in New
York on Wednesday.
It is a blow for Irene Rosenfeld, Kraft’s chief executive, who hoped her final
offer of 60 per cent cash would assuage Mr Buffett’s fears of giving Cadbury
investors too much stock.
Mr Buffett’s comments are unlikely to derail the Kraft bid, which requires the
support of half of Cadbury's shareholders to succeed. He described Ms
Rosenfeld as a "good operator".
Kraft said that it thought the deal would transform its portfolio to achieve
better long-term growth.
Support
Other Kraft shareholders were supportive. Nelson Peltz, the activist US
investor who owns 3.5 per cent of Cadbury and sold a 2-3 per cent stake in
Kraft after the deal was announced, said: "I don’t think Kraft overpaid
given what was paid for Wrigley [by Mars] a year ago."
Credit ratings agency Fitch lowered its ratings on Cadbury and Kraft, but both
remain investment-grade at BBB.
In London, Gordon Brown came under pressure from the Liberal Democrats for
failing to obstruct the Kraft deal. Nick Clegg, Lib Dem leader, said the
prime minister should have stopped Royal Bank of Scotland, which is 70 per
cent owned by UK taxpayers, from helping to fund Kraft’s bid for Cadbury.
"Tens of thousands of British companies are crying out for that money to
protect jobs."
Mandelson
The prime minister and Lord Mandelson, business secretary, have resisted
revising merger rules to make it harder for foreigngroups to buy UK assets.
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