Berkshire Hathaway is Kraft Food’s largest shareholder, but Warren Buffett’s company may not be necessary to lock in a deal to purchase British candy maker Cadbury, reports Reuters. “Buffett could put some Berkshire resources behind a Kraft bid but I find it hard to believe it is necessary,” said Vahan Janjigian, whose book, Even Buffett Isn’t Perfect, was published last year. “Credit markets have thawed enough for Kraft to get financing in traditional ways if it needs it.” Last year, Buffett’s Berkshire funded $6.5 billion towards Mars Inc.’s purchase of Wrigley & Co. It also owns See’s Candies, whose candies are a personal favorite of Buffetts–he is often seen snacking on the sweets during Berkshire’s annual shareholder meetings in Omaha Nebraska. “Kraft and Cadbury have what Buffett likes: strong brands that have been around a long time, and which have durable earnings power,” said Justin Fuller, an analyst at Midway Capital Research & Management in Chicago and author of the Buffettologist.com blog. Major U.S. credit agencies said they might downgrade Kraft in light of the Cadbury bid. Buffett “is very cognizant of the price being paid,” Fuller said. “If he starts selling his stock, for example, it would take the Buffett blessing away, and it might be hard for them to gain financing elsewhere.”
Is Buffett Needed for Kraft’s Cadbury Bid?
Warren Buffett may not need to serve as a bargaining chip as Kraft Foods seeks to buy Cadbury.
September 11, 2009