NEW YORK POST: Kraft-ing a deal

Cadbury bid puts CEO Rosenfeld's rep on the line

By JOSH KOSMAN

Last Updated: 2:19 AM, November 10, 2009

Posted: 1:38 AM, November 10, 2009

Kraft's CEO and chairman is all in.<p> </p><br /> Irene Rosenfeld, who has been seen by many as a mediocre chief executive, yesterday made her $16.4 billion formal offer for British chocolate maker Cadbury.<p> </p><br /> Her career could hinge on the results of the hostile bid.<p> </p><br /> Rosenfeld took the top spot at the food giant in 2006, promising expansion. At the time, Chairman Louis Camilleri said, "We are confident that Irene will accelerate the execution of Kraft's growth strategy."<p> </p><br /> But, generally, that has not happened, and one major shareholder said it was hard to give Rosenfeld more than a C+ grade.<p> </p><br /> "Some of Kraft's products should be more relevant during the recession," the source said. "If you can't sell Maxwell House and mac and cheese now, then when?"<p> </p><br /> To rectify that, she's been quietly working with Citigroup for more than a year to mount a bid for Cadbury. Merging the two companies would result in significant savings.<p> </p><br /> But Cadbury has already rejected her initial bids as too low, and now her reputation is riding on her ability to close the deal without overpaying.<p> </p><br /> The situation is made more precarious by Kraft's disappointing results. The company last week reported a 5.7 percent decline in quarterly revenues to $9.8 billion, and minimal sales growth.<p> </p><br /> Kraft made its initial cash-and-stock offer for Cadbury in late August. British takeover law required Kraft to make an official bid by yesterday, or walk away from the deal for several months.<p> </p><br /> Cadbury rejected the official offer, which was more than 7 percent below Cadbury's share price, almost immediately.<p> </p><br /> Kraft has 46 days to raise its bid after it posted yesterday's offer.<p> </p><br /> A leading Kraft shareholder pointed out that Kraft's share price is a key barometer of Rosenfeld's performance.<p> </p><br /> Since she was named CEO, Kraft's shares are off 10 percent, which is similar to the overall market.<p> </p><br /> He did give her points for buying a cookie business in China that has given Kraft the ability to sell its products, including Ritz crackers, in Asia.<p> </p><br /> Rosenfeld might have some support in reserve.<p> </p><br /> Six of her nine board members have been named since she became CEO. Also, leading shareholder Warren Buffett seems to be supportive. "I think he's obviously got her ear," the shareholder said.<p> </p><br /> Kraft by making a formal bid yesterday needed fully committed bank financing. The Oreo maker arranged a $9 billion loan, and in doing so, will pay lenders more than $100 million in fees even if it loses, said a source closely following the situation.<p> </p><br />

Kraft's CEO and chairman is all in.

Irene Rosenfeld, who has been seen by many as a mediocre chief executive, yesterday made her $16.4 billion formal offer for British chocolate maker Cadbury.

Her career could hinge on the results of the hostile bid.

Rosenfeld took the top spot at the food giant in 2006, promising expansion. At the time, Chairman Louis Camilleri said, "We are confident that Irene will accelerate the execution of Kraft's growth strategy."

But, generally, that has not happened, and one major shareholder said it was hard to give Rosenfeld more than a C+ grade.

AP

Kraft chief Irene Rosenfeld (above) is dangling in hostile territory in her careerstaking move to buy UK-based Cadbury.

"Some of Kraft's products should be more relevant during the recession," the source said. "If you can't sell Maxwell House and mac and cheese now, then when?"

To rectify that, she's been quietly working with Citigroup for more than a year to mount a bid for Cadbury. Merging the two companies would result in significant savings.

But Cadbury has already rejected her initial bids as too low, and now her reputation is riding on her ability to close the deal without overpaying.

The situation is made more precarious by Kraft's disappointing results. The company last week reported a 5.7 percent decline in quarterly revenues to $9.8 billion, and minimal sales growth.

Kraft made its initial cash-and-stock offer for Cadbury in late August. British takeover law required Kraft to make an official bid by yesterday, or walk away from the deal for several months.

Cadbury rejected the official offer, which was more than 7 percent below Cadbury's share price, almost immediately.

Kraft has 46 days to raise its bid after it posted yesterday's offer.

A leading Kraft shareholder pointed out that Kraft's share price is a key barometer of Rosenfeld's performance.

Since she was named CEO, Kraft's shares are off 10 percent, which is similar to the overall market.

He did give her points for buying a cookie business in China that has given Kraft the ability to sell its products, including Ritz crackers, in Asia.

Rosenfeld might have some support in reserve.

Six of her nine board members have been named since she became CEO. Also, leading shareholder Warren Buffett seems to be supportive. "I think he's obviously got her ear," the shareholder said.

Kraft by making a formal bid yesterday needed fully committed bank financing. The Oreo maker arranged a $9 billion loan, and in doing so, will pay lenders more than $100 million in fees even if it loses, said a source closely following the situation.

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