Kraft Foods has defended its takeover of Cadbury – and the sale of its US frozen food business that helped fund the deal – after criticism from major shareholder Warren Buffett.
The US food giant told just-food today (4 May) that the two transactions were “absolutely right” for the business.
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“While we respect Mr. Buffett as an investor, we strongly believe that the Cadbury acquisition and the sale of our pizza business were absolutely the right decisions for the company,” Kraft said.
Over the weekend, Buffett, whose investment fund Berkshire Hathaway has an 8% stake in Kraft, told the fund’s annual shareholder meeting that Kraft’s strategy for acquiring Cadbury was “dumb”.
“Both deals were dumb,” Buffett told Berkshire Hathaway investors in Omaha this weekend, according to Bloomberg. “The pizza deal was particularly dumb… I just hated to see them give up a significant portion of those businesses to buy Cadbury.”
Kraft, which publishes its first-quarter results on Thursday (6 May), said it was “quite confident that our combination with Cadbury accelerates shareholder value”.
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By GlobalDataThe company added: “With respect to pizza, we also believe this was the right strategic decision after receiving a strong offer from Nestle. This was our only significant frozen business, with a dedicated delivery system that did not leverage our “Wall-to-Wall” sales advantage. What’s more it was a North American business that could not be easily expanded globally.
“In short, with these transactions, our portfolio is now skewed to geographies, categories and distribution channels that promise greater long-term growth.”
