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Why would the cheese company sell their pizza business (which uses their cheese) to Nestle so that they could buy a candy company?
Seems bass ackwards to me...
Seems bass ackwards to me...
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Kraft is owned by Philip MorrisThe Wizard of AAHZ -
Kraft does everything food related.Try http://wordforge.net/index.php for discussion and debate.Comment
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Kraft is owned by Altria. There's no such thing as Philip Morris.Last edited by Felch; January 19, 2010, 11:07. Reason: edit: Just checked, and apparently Kraft was sold by Altria in 2007.John Brown did nothing wrong.Comment
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right.The Wizard of AAHZComment
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Excerpt...
Warren Buffett attacks Cadbury takeover
Warren Buffett said he 'felt poorer' as a result of the deal
Kraft Food's largest shareholder, billionaire investor Warren Buffett, has come out against the US group's takeover of UK chocolate-maker Cadbury.
"I've got a lot of doubts about the deal," Mr Buffett told US television station CNBC. "If I had the chance to vote on this, I'd vote no."
Mr Buffett's comments come a day after Kraft announced that it had agreed to buy Cadbury for £11.5bn ($19bn).
Despite his opposition, Kraft does not need the backing of its shareholders.
'Poorer'
Mr Buffett owns his 9.4% stake in Kraft through his Berkshire Hathaway investment group.
Before the Cadbury deal was agreed he had urged Kraft not to overpay for the UK firm.
He also said he questioned Kraft's decision to sell its North American pizza business for $3.7bn earlier this month to help raise the funds to pay for the Cadbury deal.
"I feel poorer," said Mr Buffett.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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I don't forsee this being a good merger. I predict the Cadbury brands won't remain Kraft's for long.One day Canada will rule the world, and then we'll all be sorry.Comment
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Here's a longer discussion by Buffett about the deal. I really like how he explains his reservations. In the video, you can tell that he is downright sad about the deal.
BECKY QUICK: We haven't even gotten a chance to talk about one of the issues that people really have been waiting to hear from you on. Kraft yesterday raising its bid for Cadbury and Cadbury accepting that raised offer. You voted 'no' when they asked you if they could be issuing more shares. But what do you think about the bid now?
WARREN BUFFETT: I feel poorer. (Laughs.) Kraft, in my judgment, well just in the past two weeks there's been two things that caused me to feel poorer. They sold a very fine pizza business and they said they got 3.7 billion for it. But, because it had practically no tax basis, they really got about 2.5 billion. They sold a business for 2.5 billion that Nestle is willing to pay 3.7 billion. Now can Nestle run it that much better than Kraft? I doubt it. But that business that was sold for 2.5 billion earned 280 million pre-tax last year. But they sold that at less, right around nine times pre-tax earnings in terms of their own figure. Now they mentioned paying 13 times EBITDA for Cadbury, but they're paying more than that. For one thing, EBITDA is not the same as earnings. Depreciation is a very real expense. But on top of that, they've got a billion-three they're going to spend of various rearrangements of Cadbury. They've got 390 million dollars of deal expenses. They are using their own stock, 260 million shares or something like that, that their own directors say is significantly undervalued. And when they calculate that 13, they're calculating Kraft at market price, not at what their own directors think the stock is worth. So, the actual multiple, if you look at the value of the Kraft stock, is more like 16 or 17 and they sold earnings at nine times. So, it's hard to get rich doing that. And I've got a lot of doubts about the deal.
BECKY: You are the largest shareholder at 9.9 percent of the company. You don't get the chance to vote this deal up or down. What do you do?
BUFFETT: (Laughs.) They took that away. They needed the vote originally but if they get a consensual arrangement sort of thing with Cadbury, and that may be, you know, if they paid up enough they were going to get it. So, who knows whether the last 20 pence or something - What it did was eliminate my chance to vote on it.
JOE: There's another way to vote, Warren, and that's with your feet. Is that what you're telling us you're going to do.
BUFFETT: That gets expensive. (Laughs.) Well, if I don't like what's going on in the government, that doesn't mean I have to leave the country either, Joe.I came upon a barroom full of bad Salon pictures in which men with hats on the backs of their heads were wolfing food from a counter. It was the institution of the "free lunch" I had struck. You paid for a drink and got as much as you wanted to eat. For something less than a rupee a day a man can feed himself sumptuously in San Francisco, even though he be a bankrupt. Remember this if ever you are stranded in these parts. ~ Rudyard Kipling, 1891Comment
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Looks like I should be running a Buffett company.Buffett Cut Kraft Stake After Deals He Called ‘Dumb’ (Update1)
May 17, 2010, 5:57 PM EDT
(Updates with lower Johnson & Johnson stake in the fifth paragraph.)
By Andrew Frye and Hugh Son
May 17 (Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. lowered its stake in Kraft Foods Inc. in the first quarter as the billionaire opposed the foodmaker’s takeover of Cadbury Plc and the sale of its pizza brands.
“Both deals were dumb,” Buffett told Berkshire investors May 1 in Omaha, Nebraska, where his company held its annual shareholders’ meeting. “The pizza deal was particularly dumb.”
Berkshire cut its holding in Kraft by 23 percent, or about 31.5 million shares in the three months ended March 31, Berkshire said today in a regulatory filing disclosing U.S. equity investments at the end of the first quarter.
Berkshire also eliminated its stake in health insurers WellPoint Inc. and UnitedHealth Group Inc. and lender SunTrust Banks Inc. Buffett has been spending more on fixed-income investments and acquiring companies, and funding the purchases in part by selling equities.
Berkshire reduced stakes in Johnson & Johnson, the health- care products company based in New Brunswick, New Jersey, by 12 percent, and in Gannett Co., the newspaper company based in McLean, Virginia, by 21 percent.
Berkshire’s filing showed a 9.4 percent reduction in its stake of ConocoPhillips, the third-biggest U.S. energy company. The filing also showed a reduction in holdings of Costco Wholesale Corp., the largest U.S. warehouse club, by 18 percent.
In February, Buffett, 79, completed his biggest takeover, paying $27 billion for the 77.5 percent of Burlington Northern Santa Fe that Berkshire didn’t already own. In recent years, some of his biggest stock bets have been outside the U.S.
China, Germany
Berkshire’s 2008 investment in Chinese carmaker BYD Co. soared to a market value of $1.99 billion at the end of December, compared with a purchase price of $232 million.
Berkshire became the biggest shareholder in reinsurance rival Munich Re of Germany in the first quarter. Buffett’s firm disclosed a stake in the world’s largest reinsurer in January when the holding exceeded 3 percent.
Kraft in March acquired Uxbridge, England-based Cadbury for about 13.6 billion pounds ($20.8 billion) in cash and stock after a five-month pricing dispute. The deal transformed the Northfield, Illinois-based company into the world’s biggest confectioner, and Kraft said the acquisition would give it leading positions in emerging markets. The purchase was partially funded by the sale of Kraft’s DiGiorno and Tombstone pizza brands to Nestle SA.
“I just hated to see them give up a significant portion of those businesses to buy Cadbury” at the price of the sale, Buffett said May 1. He had previously called the acquisition “a bad deal” based on Kraft’s share price at the time, which he considered to be low.
Kraft spokesman Michael Mitchell said May 1 that the deal “accelerates shareholder value” and that selling the pizza businesses was the right decision after fielding a “strong” offer from Nestle. Mitchell didn’t immediately return a call seeking comment today. Hugh Suhr, a spokesman for Atlanta-based SunTrust, declined to comment.
--With assistance from Sapna Maheshwari and Rick Green in New York and Dakin Campbell and Dan Reichl in San Francisco Editors: Dan Kraut, Philip Lagerkranser
To contact the reporters on this story: Andrew Frye in New York at afrye@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net.
To contact the editor responsible for this story: Dan Kraut at dkraut2@bloomberg.netComment
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I look forward to tobacco & cheese flavored bonbons.Life is not measured by the number of breaths you take, but by the moments that take your breath away.
"Hating America is something best left to Mobius. He is an expert Yank hater.
He also hates Texans and Australians, he does diversify." ~ BraindeadComment
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consolidating in Switzerland - Brits are not too happy about it.
The U.S. owners of Cadbury are planning to shift swathes of the British business to Switzerland in a move that is likely to cost the UK exchequer millions in tax.
Kraft, who controversially bought the iconic chocolate maker in February, has been secretly planning a new Swiss group to 'grow the top line of the company'.
The American owners want to turn the 186-year-old British firm into a subsidiary of a new Swiss company - a change that will provoke more anger over the buyout.
It is a change which will affect its corporation tax bill. Last year, the firm paid more than £200million to HM Revenue and Customs.
Socrates: "Good is That at which all things aim, If one knows what the good is, one will always do what is good." Brian: "Romanes eunt domus"
GW 2013: "and juistin bieber is gay with me and we have 10 kids we live in u.s.a in the white house with obama"Comment
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Just met with our financial advisor. He advised looking at funds that specialize in M&A for the next few odd years as recovery comes about and cash flush companies are looking at opportunities. Seems that the focused strategy these M&A funds employ shorting the buying co. and buying the prospect is attractive if companies like Kraft do these kind of deals."Just puttin on the foil" - Jeff Hanson
“In a democracy, I realize you don’t need to talk to the top leader to know how the country feels. When I go to a dictatorship, I only have to talk to one person and that’s the dictator, because he speaks for all the people.” - Jimmy CarterComment
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Someone called Warren Buffet should know about food
Speaking of Erith:
"It's not twinned with anywhere, but it does have a suicide pact with Dagenham" - Linda SmithComment
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Buffett clearly isn't an internet poster.JOE: There's another way to vote, Warren, and that's with your feet. Is that what you're telling us you're going to do.
BUFFETT: That gets expensive. (Laughs.) Well, if I don't like what's going on in the government, that doesn't mean I have to leave the country either, Joe.
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