Wall Street Journal reported that investor Warren Buffett waded into the battle for Cadbury PLC, issuing a rebuke of Kraft Foods Inc.'s just-sweetened, nearly $17 billion takeover offer for the British confectionary company. As Kraft's largest shareholder—with a 9.4% stake—Mr. Buffett's holding company, Berkshire Hathaway Inc., said it wouldn't support the issuance of new shares to pay for a Cadbury deal. "To state the matter simply, a shareholder voting 'yes' today is authorizing a huge transaction without knowing its cost or the means of payment," Berkshire Hathaway said in a statement.

But Mr. Buffett's action could end up working in Kraft's favor. His resistance, while a public slight to Kraft Chief Executive Irene Rosenfeld, may have in fact furthered her cause, giving her cover for not raising the bid and tamping down expectations among Cadbury shareholders."

London's Financial Times called Buffett's intervention "a blatant attempt to talk up the food group's share price" -- and if so, it worked. Kraft shares closed Tuesday at $28.77, up 4.9 percent, while Cadbury was down 3.2 percent at 779 pence.

Kraft Foods Inc. announced Wednesday that holders of 1.5 percent of shares in Cadbury PLC have so far accepted its hostile takeover offer, but the U.S. conglomerate stands to gain support as the offer price moves closer to Cadbury's market value.

The gap narrowed on Tuesday as Swiss food company Nestle said it would not make an offer for Cadbury, Kraft offered more cash in an alternative -- but no higher -- offer, and billionaire Warren Buffett, Kraft's biggest shareholder, warned against offering any more stock to sweeten the offer.

Kraft financed its enhanced cash offer by selling its U.S. pizza business to Nestle.

Most investors will likely be waiting until a Jan. 19 deadline for Kraft to raise its bid before deciding whether to accept, with analysts saying a price over 800 pence per share would be needed for Kraft to succeed.

Kraft's cash and shares bid is currently worth 765 pence per Cadbury share or 10.5 billion pounds ($16.8 billion), "Kraft will have to offer at least 810 pence to attract acceptances from current Cadbury shareholders," said analyst Dirk Van Vlaanderen at Jefferies International.

Martin Dolan at Execution Research said Kraft will have to offer over 800 pence to encourage Cadbury to let it see its books and believes Kraft could pay an extra 60 pence per share.

Some analysts still believe that another suitor may emerge.

“We think that Hershey is keen to make a deal with Cadbury,” analysts at Numis stockbrokers wrote in a research note. “In reality Nestle is acting as a fund provider to the Cadbury deal and we would not be surprised to see the Swiss group play that role again by buying assets from Hershey, the KitKat brand in the U.S. being an obvious candidate.”

Source: WSJ, FT, Reuters