Following today's announced merger between Cadbury (CBY) and Kraft (KFT), some could argue that Kraft's largest shareholder, Warren Buffett, helped to get the deal done when he publicly voiced his concerns about not liking the deal. Buffett's announcement that he wouldn't vote in favor of issuing more stock to get the deal done served two purposes. First, it sent the message to CBY that they shouldn't be too greedy and hold out for a much higher bid from KFT. Second, it helped to boost KFT's stock by close to 10% as investors became less concerned about KFT going out and spending too much to buy CBY. With KFT shares 10% higher than they were on January 5th, the company could now use 10% less stock in the stock portion of its acquisition.
Today, Buffett is in the headlines regarding POSCO (PKX), another company in which he is a large shareholder (4.5%). This morning Reuters quoted PKX's CEO as saying that Buffett was looking to buy more shares in the company "after missing the opportunity to buy them on dips last year when the global financial crisis depressed equity asset values." In reaction to the news, the stock is trading 3.5% higher, partially erasing a one-week slide in the company's shares. The only question for investors is, why would Buffett, or for that matter any other investor, be telegraphing his moves before acually making them. Does anyone seriously believe that Buffett is going to go out and buy more shares in the company after publicly saying he liked the company?
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