From the WSJ's Deal Journal blog:
You can never be 100% sure about what’s going on in any hostile takeover bid. But here’s what I’d bet is going on behind closed doors at Cadbury’s HQ.
They’re freaking out.
Forget £9 pounds a share. Cadbury will now be sold to Kraft. And Cadbury shareholders will be lucky to get any premium over today’s £7.70 share price.
Certainly, as the Cadbury share price falls to match the Kraft offer, it looks as if its takeover defense is crumbling. And all it took was one simple, but very smart press statement from Kraft shareholder Warren Buffett.
Now, that’s one guy who knows how to negotiate.
It’s amusing to read this morning’s press about Buffett’s masterstroke – a “rebuke” to Kraft, said the WSJ. Kraft CEO “Irene Rosenfeld may well be losing marks,” said the FT’s Lex Column.
Are they kidding?
Warren Buffett is Kraft’s single biggest shareholder. He’s owns 9.4% of the company. He could probably kill the Kraft bid for Cadbury or get rid of Rosenfeld with one or two phone calls.
But yesterday’s press release probably seemed a pretty obvious thing to do. Sure, there’s the case against just issuing Kraft shares: Its shares have languished and the terms of the Cadbury takeover aren’t agreed.
But why not help CEO Rosenfeld out by stopping her from overpaying? Right now, there are no other bidders. After months of speculation about Hersheys and Ferrero and private equity, there is still no viable white knight for Cadbury.
Why not take away her freedom to negotiate against herself?
There’s already plenty of pressure on Rosenfeld to raise Kraft’s bid, to just “get it done.” It’s the dynamic of any big deal – the ups and downs, the hours burned talking with the board and advisers, the hours spent dreaming of running a bigger, better company....MORE
*5 No is what's known as a forcing bid. From Richard Pavlichek:
...The classic meaning of a 5 NT response to a no trump opening bid is to invite a grand slam. Opener is supposed to bid 6 NT if minimum or 7 NT if maximum. Since I can’t remember the last time I used this bid, I will not waste your time with an example.
(If you get these hands a lot, I recommend you play money bridge for big bucks.)