Amidst the entire hullabaloo, Kraft on Wednesday said that it has got positive response from only 1.52 per cent of Cadbury shareholders for buying stake in the company. The deal, which at present is valued at $16.8 billion and is expected to go up, is open till February 2.
The nod came from the shareholders holding less than two per cent of the stocks in the chocolate making company. The announcement came just after a day when Kraft announced to sell off its North American frozen pizza business to Nestle for $3.7 billion. It’s expected that Kraft has done the deal to increase its bid for buying a piece in Cadbury.
Meanwhile, the efforts of Kraft took a shot when Warren Buffett’s Berkshire Hathaway said that it will be voting against the deal, which calls for issuing of 379 millions of new Kraft shares. Warren Buffett is the biggest shareholder in Kraft.
Following the news, Kraft’s share price dropped 1.6 per cent in the early trades at the Wall Street. Cadbury too was down 1 per cent in London. However, the good news for Kraft is that Buffett has said that he may change his mind if the shareholders don’t see huge value erosion.
Experts believe that the so called hostile takeover would require Kraft to raise its offer price substantially. Some experts have quoted the figure to be between 800-810 pence against 765 pence offered at present. On the other hand, reports have suggested that many of the shareholders within Cadbury are waiting for Kraft to increase the share price before they decide on whether to sale or not to sale their stake. Kraft has still got time since it is allowed to raise its bid till January 19.
Meanwhile, there is no news from Hershey Co’s office so far. Hershey was also expected to compete with Kraft in the race to acquire Cadbury.