Kraft Could Dilute Stock

Kraft may dilute their shares by adding more than 300 million shares. Warren Buffet isn’t thrilled about that.  This will be one to watch.

Commodity stocks send TSX higher; U.S. up on jobs, service sector data

Consumer discretionary stocks were also supportive as Astral Media (TSX:ACM.A) gained 55 cents to C$34.23 and Magna International (TSX:MG.A) advanced $2.76 to $62.29.

Markets racked up major gains at the first of the week but activity has been sluggish since then.

Many analysts said investors were holding back while they wait for Friday’s U.S. Labour Department report on employment.

Ahead of that data, the ADP National Employment Report on private companies showed that 84,000 private sector jobs were lost in December. While an improvement over the 169,000 jobs lost in November, it missed expectations of 73,000.

The ADP report is often used as a forecast for the government’s report, which economists expect to say that the U.S. unemployment ticked up to 10.1 per cent in December from 10 per cent in November.

And the Institute for Supply Management’s U.S. non-manufacturing index came in at 50.1, up from 48.7 in November. A reading of 50 marks the dividing line between growth and contraction in the service sector, which includes more than 80 per cent of U.S. economic activity.

“This is encouraging and brings this indicator over to the bright side of indicators showing a generally improving tone,” said BMO Capital Markets senior economist Jennifer Lee.
“Now, while this reading is just barely above the ‘expansion’ mark and is hardly reason to celebrate… well, I’ll take it.”
The Federal Reserve will also release the minutes from its December meeting at mid-afternoon.

The TSX Venture Exchange moved 13.01 points higher to 1,564.69.

New York markets were higher with the Dow Jones industrials ahead 12.1 points to 10,584.1 after shedding 12 points on Tuesday.

The Nasdaq composite index rose 1.12 points to 2,309.83 while the S&P 500 index moved up 0.7 of a point to 1,137.2.

In corporate news, Kraft Foods Inc. announced Wednesday that holders of 1.5 per cent of shares in chocolate and gum maker Cadbury PLC have so far accepted its hostile takeover offer. But the U.S. conglomerate stands to gain support as the offer price moves closer to Cadbury’s market value. The gap narrowed on Tuesday as Swiss food company Nestle said it would not make an offer for Cadbury, Kraft offered more cash, and billionaire Warren Buffett, Kraft’s biggest shareholder, warned against offering any more stock to sweeten the offer.    –more

Related Kraft Foods articles

• Kraft improves Cadbury offer (seattletimes.nwsource.com)
• Kraft: Holders of 1.5 Pct of Cadbury Accept Offer (abcnews.go.com)
• Buffett votes against Kraft bid for Cadbury (money.cnn.com)