Luxury Webblog Spot

By JONATHAN BIRCHALL and JAMES POLITI

Nelson Peltz, the US activist investor, has taken a 3 per cent stake, worth about Dollars 1.7bn, in Kraft, and willput pressure on the USfood company to buy back shares and consider thesale of brands including Maxwell House coffee and Post cereals.

According to people familiar with the matter, Mr Peltz had not yet held talks with management at Kraft, which was spun off from Altria, its former parent company,earlier this year. However, it was likely that contact would be made shortly, these people said.

Kraft shares closed up 6.6 per cent at Dollars 36.74.

Mr Peltz’s pursuit of Kraft follows a largely successful series of campaigns by Trian, his investment fund, against managements at Wendy’s International, the US hamburger chain, Tiffany, the jewellery retailer, and Cadbury Schweppes, the UK drinks and confectionery group.

In addition, Mr Peltz last year emerged victorious from a proxy fight that pitted him against HJ Heinz, the ketchup and baked beans manufacturer, where he now sits on the board of directors.

Kraft and Trian yesterday declined to comment.

But one person familiar with Mr Peltz said he viewed Kraft in a similar light as Heinz: a company with strong brands that was not performing to its potential.

The right recipe for Kraft was a combination of changes to the balance sheet, including share buy-backs that would lift the company’s debt load and a realignment of its businesses, the person said.

The person added that after raising money from the sale of brands such as Post and Maxwell House, more investment could be ploughed into better performing segments such as groceries and frozen foods.

Irene Rosenfeld, Kraft’s chief executive, is pursuing a three- year plan aimed at improving its performance that includes cost- cutting, accompanied by increased spending on marketing ofits core brands such asOreo cookies and Maxwell House.

The company has not discussed any disposals of its collection of brands, though underperforming segments such as cheese and salad dressing have been earmarked for overhaul.