LONDON -- The acquisition of 186-year-old Cadbury
will make Kraft the world's biggest chocolate and
confectionery producer by revenue, adding such
brands as Dairy Milk and Creme Egg, Trident gum and
Green & Black's to Kraft's portfolio. Kraft will also
become the No. 2 gum producer, behind privately held
Mars Inc., and consolidate its position as the world's
second biggest food group with combined revenue of
nearly $60 billion in 2008.
Kraft Foods on Tuesday (Jan. 19) increased its offer by
14% to win over Cadbury PLC's board, which for more
than four months had jeered at the idea of selling. For
Kraft, Cadbury's higher-margin chocolate and gum
business is expected to accelerate the company's
profile in emerging markets. Kraft said the deal would
add 5¢ to earnings in 2011. Read more on Kraft's
deal to acquire Cadbury.
Kraft shareholders won't get a chance to vote on the
Cadbury deal because Kraft bolstered the cash portion
of the bid and won't need shareholder approval to issue
more shares to finance the transaction -- the largest-ever
European deal in the food and beverage sector,
according to Thomson Reuters.
Famed investor Warren Buffett criticized the $19.4
deal. Buffett told cable-news channel CNBC in an
interview Wednesday that he would vote no, if he had
the chance to vote. His investment firm, Berkshire
Hathaway Inc., is Kraft's largest shareholder, owning
138 million shares, or 9.4%. He also said that Kraft
its North American frozen-pizza business too cheaply.
The U.S. food giant sold its DiGiorno, Tombstone and
Jack's pizza brands on Jan. 5 to Nestlé for $3.7
billion to raise cash for the Cadbury deal. Read more on Kraft's
pizza deal. But he told CNBC he still thinks
Kraft shares are "undervalued."