Monday, January 31, 2011

Kraft (KFT) Doesn't Get Preliminary Injunction Against Starbucks (SBUX)

Kraft Foods (NYSE:KFT) announced their attempt to have a preliminary injunction against Starbucks Coffee Company (Nasdaq:SBUX) was denied by the U.S. District Court for the Southern District of New York.

The General Counsel for Kraft responded saying:

"We're disappointed the judge decided not to grant a preliminary injunction. While we've always acknowledged that there are certain legal hurdles for obtaining a preliminary injunction, we avidly believe this case justifies an injunction and will argue that point vigorously on appeal.

"Importantly, however, today's decision is not a ruling on the core question of whether Starbucks can terminate our contract without compensating us as the contract requires. That question will be decided in arbitration.

"Without proof of material breach, Starbucks only legitimate termination mechanism is to pay Kraft fair market value for the business, plus a premium. We believe more strongly than ever that such a payment is the appropriate outcome in this dispute."

Kraft closed Friday at $30.53, down $0.01, or 0.03 percent. Starbucks closed at $31.73, down $1.30, or 3.94 percent.

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