Franklin fund bought into Cadbury hoping for buyout deal
Nov 8th 2009 1:00PM
Updated Dec 3rd 2009 1:53PM
Some of the money managers at fund and money management firm Franklin Resources (BEN) must be clairvoyant. They bought Cadbury (CBY) shares before Kraft (KFT) made its buyout offer for the U.K. company. Franklin now owns at least 7.2% of Cadbury's shares.
Speaking at a conference in Vienna, Franklin fund manager Anne Gudefin, whose Mutual Global Discovery Fund holds the Cadbury shares, said "We have an idea" of a bid price for Cadbury that would be acceptable, according to a report from Bloomberg. Franklin bought a lot of the stock at below 550 pence per share. Cadbury closed trading Friday at 758 pence. A better bid from Kraft could take the shares higher.
The Franklin move could be the beginning of a trend that has been missing on Wall Street since the market collapse. It was not unusual prior to 2007 for mutual funds, money management firms and hedge funds to buy shares in companies that they believed would be acquisition targets. At the rate M&A and private-equity deals were taking place then, a well-reasoned gamble could pay of handsomely.
M&A activity has roared back in the last several months, and betting on which companies maybe acquired is coming back with it.
Douglas A. McIntyre is an editor at 24/7 Wall St.