Kraft Foods Shares Rise On Reports of Icahn Stake, Peltz Meeting

Word that activist investor Carl Icahn has taken an undisclosed stake in Kraft Foods sent shares higher by 3.13% Friday. The story was initially broken by the Wall Street Journal; both Icahn and Kraft declined to comment. Shares had been down 2.5% in 2007, despite CEO Irene Rosenfeld's plan to make Kraft more profitable. Rosenfeld also agreed to sit down with another activist investor who recently disclosed a 3% stake in Kraft, Nelson Peltz. Peltz believes Kraft should divest itself of certain less profitable businesses such as Post cereals and Maxwell House Coffee, in order to focus on its frozen foods and grocery businesses. Peltz would also like to see the company increase the amount it had allocated to share buybacks, currently $5 billion. Rosenfeld recently announced the purchase Group Danone's cookie and cracker business for more than $7 billion, and does not appear ready to decrease the size of Kraft's holdings, leading to a possible showdown with Peltz.
Sources: Wall Street Journal, Bloomberg, MarketWatch
Commentary: Kraft: Raiders of the Lost Ark • Kraft's Danone Deal A Good One For Shareholders • Kraft Foods Jumps On Reports of Peltz's 3% Stake
Stocks/ETFs to watch: Kraft Foods Inc. (KFT). Competitors: General Mills Inc. (GIS), Del Monte Foods Company (DLM), Kellogg Company (K). ETFs: PowerShares Consumer Goods ETF (PRFG), Consumer Staples Select Sector SPDR (XLP), Ultra Consumer Goods ProShares (UGE)
Related: Kraft Foods product listings

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