Buffett to FBN: Kraft is Already Good Business, Now it Will Be Two Good Businesses

Krafts (NYSE:KFT) largest shareholder got a call recently letting him know that the food company's CEO, Irene Rosenfeld, wanted to fly to Omaha to have breakfast with him.

Warren Buffett, Berkshire Hathaway's chairman and CEO, told the FOX Business Network, I had no idea why she was coming.

But he said yes, and Tuesday morning, he and Rosenfeld had breakfast at the Hilton in Omaha. We all had English muffins, he joked.

Of course, the news Rosenfeld was delivering was that she and the board of Kraft wanted to carve the company into two separate units -- grocery and snacks.

He liked the idea.

Im fine with it. Irene is a good manager and she does a good job, he said

Thats a bigger endorsement than Buffett has given to Kraft management, specifically Rosenfeld, in the past.

Last year, he was very vocal in his opposition of Kraft purchasing Cadbury. When asked how their relationship is now, Buffett told FBN, Its fine. Im sure she would have preferred I was supportive of the Cadbury deal but theres no edge or anything between us.

I asked Buffett if he would keep his near 6% stake in Kraft and he told me, Listen, I have Oreos for breakfast so Im in the stock with both feet. He added, Its a good business and itll be two good businesses.

While Kraft is up 15% year-over-year, its up about 29% since Kraft took Cadbury under its wing. On todays announcement, the stock is trading up nearly 3% (despite the steep pullback in the broader market) as investors swallow the news that Kraft will split into a higher-global-growth snacks business and a slower-growing but stronger-margin grocery business.

Krafts snack business includes Oreos, Trident gum, and Cadbury candy, while the grocery business houses Kraft Macaroni and Cheese, Crystal Light, Cheeze Whiz and Jell-O.

Buffett, who turns 81 on August 30th, finished out our conversation this morning by saying hes never felt better and said his bridge team competes in the semi-finals of the Omaha regional bridge tournament tonight.

We beat the Bulgarians yesterday and the Poles last night.