Kraft activist shareholder is ungagged

ACTIVIST investor Nelson Peltz has had a two-year gagging order lifted by Kraft, sparking talk that the US food giant will now come under pressure to secure a takeover deal with Cadbury.<br /><br />Peltz&rsquo;s Trian Fund Management group had struck a two-year &ldquo;standstill&rdquo; agreement with the US group in November 2007, under which he promised not to criticise its &ldquo;corporate strategy, business, corporate activities or management&rdquo; but this has now expired.<br /><br />Peltz, estimated to be worth $1.04bn (&pound;638m), owns a stake in Kraft and also its bid target Cadbury, and in the past has used his influence as a Wall Street heavyweight to sway the management of both companies into adopting his strategy.<br /><br />Although he has not commented on a tie-up between Cadbury and Kraft, a merger would fit in with his strategy of improving margins at the businesses he owns. <br /><br />Shortly after Peltz bought a stake in Cadbury in 2007 through his Trian Fund he convinced it to carry out the demerger of its US beverage business. <br /><br />And after raising his stake in Kraft he met with Kraft&rsquo;s chief executive Irene Rosenfeld and pushed her to think about divesting its lower margin brands and expand the group&rsquo;s confectionary and biscuit business.<br /><br />Rosenfeld followed Peltz&rsquo;s guidance and sold Kraft&rsquo;s Post cereal brand to Ralcorp for $2.6bn and acquired the biscuit division of Danone for $7.2bn.<br /><br />Kraft made a &pound;10.2bn bid for Dairy Milk maker Cadbury in September &ndash; but it was immediately rejected by Cadbury&rsquo;s board as &ldquo;unattractive&rdquo;. <br /><br />Analysts believe Kraft will have to sweeten its offer to win Cadbury shareholder approval after it revealed a seven per cent rise in quarterly revenues.<br /><br />Kraft is understood to be considering returning with a formal offer but may wait until after its own third-quarter results on 3 November. <br /><br />The Takeover Panel has set Kraft a 9 November deadline to make a formal offer.<br /><br />Meanwhile, US investment fund Legg Mason yesterday said it had avoided a boardroom coup by giving Peltz a seat on the board.