Tags: Buffett | Kraft | Cadbury | Poorer

Buffett: Kraft Deal for Cadbury Makes Me Poorer

By Dan Weil   |   Wednesday, 20 Jan 2010 03:20 PM

Investment icon Warren Buffett continues to oppose Kraft’s $19 billion deal to take over Cadbury as it dilutes Kraft shareholders.

The transaction does so because Kraft is paying for Cadbury partly with its own shares. And Buffett’s Berkshire Hathaway is Kraft’s biggest shareholder.

After Kraft’s agreement to make the purchase, “I feel poorer,” the world’s second richest man told CNBC.

What particularly bothers him is that Kraft sold its pizza business to Nestle for only nine times earnings, while it is buying Kraft for a whopping 16 to 17 times earnings.

“That gets expensive,” Buffett said. “Kraft is using its own stock that its own directors say is significantly undervalued. . . . If I had a choice, I’d vote no, but I don’t have a vote.”

Berkshire says he supports Kraft CEO Irene Rosenfeld overall. “I think Irene has done a good job in operations. I think she’s a good person,” Buffett said. “I just don’t want her making this deal.”

He also says he’s not about to sell his Kraft shares. “I think Kraft is still undervalued, I just don’t think it’s as undervalued as three weeks ago,” Buffett said.

Others share Buffett’s skepticism over the deal. “My worry is they ruin (Cadbury)," Timothy Ramey, analyst at D.A. Davidson, told USA Today.

After the deal was announced, he cut his rating on Kraft to "hold" from "buy."


© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
Investment icon Warren Buffett continues to oppose Kraft s $19 billion deal to take over Cadbury as it dilutes Kraft shareholders. The transaction does so because Kraft is paying for Cadbury partly with its own shares. And Buffett s Berkshire Hathaway is Kraft s biggest...
Buffett,Kraft,Cadbury,Poorer
229
2010-20-20
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved