US: Buffett becomes largest Kraft shareholder
By: just-food.com | 15 February 2008
Warren Buffett, the billionaire American investor, has become the largest individual shareholder in Kraft Foods after amassing an 8.6% stake worth some US$4.32bn.
The purchase of the shares, which took place last year and was conducted through Buffett's company, Berkshire Hathaway, was confirmed in a filing with the Securities and Exchange Commission (SEC).
Last month, Kraft reported a 6.6% fall in underlying operating income for 2007 to US$4.9bn, hit by the spike in global dairy prices over the last 12 months.
Net sales rose by 5.1%, on an organic basis, to $35.7bn but Kraft said rising dairy costs - as well as investment in developing new products - had offset revenue gains.
However, in spite of the full-year results, analysts have seen Buffett's investment in Kraft as a vote of confidence from an experienced corporate player with an eye for solid brands and franchises.
Sectors: Baby food, Bakery, Chilled foods, Dairy, Snacks
Companies: Kraft Foods
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There is currently 1 comment on this article
Not a vote of confidence in management... but the vote of an investor realising that something is probably going to happen, one way or another, to change the fate of this chronic under-performer.
The management of Kraft through the years has made one mistake after the other. The biggest mistake was buying Nabisco, which added one low-growth, US-centric business to another, reducing at a stroke the company's emerging market exposure and giving it massive growth problems in its domestic market. The rationale for the acquisition was cost synergies. A lame excuse at the best of times.
The jury is still out on Irene Rosenfeld, but the case for the defence has been fairly weak so far...
TheFoodAnalyst.com said at 6:15 pm, February 15, 2008
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