The Kraft Acquisition of Cadbury-Part 1

Last week, in an extraordinarily candid intrview on CNBC, Warren Buffett stated his views on a wide range of topics, including his strong disagreement with Kraft's board of directors' corporate governance and management's decisions in connection with the acquisition of Cadbury. His corporate governance concerns follow:

".....for the people that pay attention to corporate governance, Kraft issued a 78-page proxy statement close to a month ago. And the sole issue was the issuance of 370 million shares of Kraft stock. That was the only thing to be voted on. And in 78 pages, thay told you about a deal that wasn't going to happen, and they told you a lot of other things about how the directors recommended this and everything else. There's one thing they didn't tell you. They didn't tell you what the directors-how the directors felt about the value of Kraft stock. Now, after I came out and said the stock was undervalued, the directors immediately came out and said that they thought it was undervalued, too. What point could possibly be more important when asking shareholders to vote on issuing 370 million shares is the director's views on whether they were going to get fairer value for these shares? In other words, if the directors thought those shares were significantly undervalued, when they issued that proxy statement, I think they had the duty to tell shareholders that they felt that way. Otherwise, you know, the shareholdrs could assume that they were getting fairer value for the shares."
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CNBC Squawk Box Interview, January 20, 2010