In an exclusive interview today on Bloomberg Television, Irene Rosenfeld, CEO of Kraft Foods, strongly defended the company’s acquisition of Cadbury which closed earlier this year. Ms. Rosenfeld believes that investors who remain skeptical regarding the acquisition will eventually be won over as projected synergies appear in financial results. Skeptical investors include Warren Buffett who opposed the acquisition and “felt poorer” based on the terms of the deal. Mr. Buffett has reduced Berkshire Hathaway’s stake in Kraft in the months since the Cadbury acquisition closed. Read this article for excepts and to view the video.
Kraft’s Executive Compensation Policies Reward Value Destruction
Kraft Foods Inc. released its annual proxy statement yesterday which serves as timely illustration of the faulty logic that compensation committees regularly use when setting executive compensation. As we discussed last month, compensation policies can encourage executives to pursue value destroying mergers. Kraft CEO Irene Rosenfeld earned $26.3 million in total compensation for 2009 with significant components granted due to “exceptional leadership” that resulted in closing the Cadbury acquisition in February. Read this article for more details.
Buffett “Feels Poorer” Based on Terms of Cadbury Deal
In a CNBC interview this morning prior to the special meeting of Berkshire Hathaway shareholders, Warren Buffett comments on a number of topics including the Obama Administration’s proposed bank tax. Mr. Buffett does not believe that banks are making “obscene profits” and companies that have already repaid TARP funds should not be forced to effectively pay for bailouts at Fannie Mae and Freddie Mac. Read this article for more details and to view the video.
Hershey’s Potential Bid for Cadbury Involves Buffett’s Favorite Banker
The Financial Times reports that Hershey is getting closer to finalizing the terms of a counter-bid to Kraft’s hostile £10.4 billion bid for Cadbury. The war of words between Kraft and Cadbury has escalated in recent days as Cadbury’s management ratchets up the rhetoric regarding Kraft’s “conglomerate” model being an unattractive fit for Cadbury. Warren Buffett’s recent comments regarding Kraft seeking a “blank check” for the purchase only dimmed prospects for the acquisition even further. Read this article for more details.
Buffett Opposes Kraft’s Request for “Blank Check” in Cadbury Bid
In a press release issued by Berkshire Hathaway this morning, Kraft management is criticized for seeking a “blank check” which will allow the company to issue up to 370 million shares in order to facilitate an offer for Cadbury. The press release refers to Kraft’s proxy statement for a special meeting set for February 1 seeking approval for issuance of up to 370 million shares. Read this article for more details.