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Look deeper and compare opertaions in the food processing and distribution businesses.
Jun 18 07:15 am
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All Comments by R. Richard Schweitzer »A 'Cheesy' Options Combination for Buffett Lovers [View article]
Currently, concentrate on the problems managements face in distribution - especially with KFT's diverse lines of goods, and refrigeration requirements.
Next compare the ROE of KFT (which I believe is somewhere below 10, with say HNZ which is somewhere above 30.
The probable scenario: A European purchase of KFT by a dairy goods specialist (Dannon?), followed by a break up and sell off of other lines to specific goods distributors (some of whom will be over-optimistic as to the value of brand names).
Possible net yield: est. $37 max.
Disclosure: Long KFT from spin off by MO