There have been rumors for a few days that Kraft (NYSE: KFT) would buy Groupe Danone's (NYSE: DA) biscuit unit to improve its sales in Europe. Well, dreams do come true. Kraft has offered $7.2 billion for the Danone operation, and it appears that the two companies are close to a deal.
Figures from the two companies put Kraft's biscuit and cookie annual sales at about $5 billion and Danone second in the world at $3 billion. Certainly Kraft management will say that there are savings in cutting employees, factories and distribution channels. And that may be right, but some will say that they see the invisible head of raider Nelson Peltz pushing Kraft to be more aggressive in transforming its business.
Petlz recently bought 3% if Kraft. As if reading from the 'raider' handbook on badgering CEOs, he immediately asked the company to divest under-performing assets and look at alternative uses for its cash. That usually includes special dividends to shareholders or stock buybacks.
Kraft may be indicating that it will buy new businesses with its capital whether it be cash or stock, and Mr. Peltz can keep his seat in the peanut gallery and watch.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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