By Patricia Sellers
January 7, 2010

Rarely does a rebuff from Warren Buffett do so much good. Kraft Foods

stock rose 4.9% yesterday after the Oracle of Omaha, whose Berkshire Hathaway

is Kraft’s largest shareholder, voted against an issuance of  370 million shares to help finance a Cadbury

acquisition. Cadbury fell, on the logic that Buffett, by tightening the leash on Kraft CEO Irene Rosenfeld, is preventing her from sweetening the price for the British-based candy giant.

The tug-of-wars–between Kraft and Cadbury and Rosenfeld and Buffett–are fascinating to watch. Having known both Buffett and Rosenfeld for many years, I’ll share three quick thoughts:

1. It’s really not so surprising that Buffett reined in Kraft’s ability to raise its bid for Cadbury. Buffett has a long history of making bids and sticking to them. Of course, this is Kraft’s acquisition, not Berkshire Hathaway’s

. But since Berkshire owns 9.4% of Kraft, clearly Buffett’s vote matters. And so does his advice.

2. Kraft’s Irene Rosenfeld is one of the most disciplined bosses around. She was trained and mentored decades ago by Jim Kilts, who ran Kraft and later Gillette, which he sold to Procter & Gamble

in 2005. Buffett was a big owner of Gillette stock and a longtime fan of the Kilts’ style of leadership–aggressive but pragmatic, forthright but not flashy. That’s Rosenfeld’s style too.

3. An oddity in the latest twist in this four-month takeover drama: Kraft’s response to Buffett’s vote against issuing new shares. In a statement yesterday, Kraft called its stock “undervalued.” If Kraft stock really is worth more than the current price–just under $29–isn’t issuing new shares an unduly expensive way to pay for a global candy prize?

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