Page last updated at 15:29 GMT, Wednesday, 20 January 2010

Warren Buffett attacks Cadbury takeover

Warren Buffett
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.


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.

Borrowing funds

Kraft's takeover represents 840 pence per Cadbury share. Cadbury investors will also get a 10p per share dividend.

Irene Rosenfeld
Mr Buffett said he liked Irene Rosenfeld, but disagreed over Cadbury

While Cadbury shareholders have until 2 February to back the deal, led by the firm's institutional investors, this is expected to be a formality.

Kraft's offer consists of 500 pence in cash, with the rest made up of Kraft shares.

The US group has said it will borrow £7bn to finance the deal.

'Bad deal'

Mr Buffett added that while he personally liked Kraft chief executive Irene Rosenfeld, they disagreed over Cadbury.

"She thinks this is a good deal, I think it's a bad deal," he said.

"I think she's a perfectly decent person, she could be a trustee under my will, I just don't want her making this particular deal."

A Kraft spokeswoman said the company respected Mr Buffett's opinion.

However, she added: "We think this is a good deal for us.

"It transforms our portfolio for better long-term growth."

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