Berkshire Hathaway Potentially Liquidating its Holdings in Kraft Heinz
In a move that doesn’t bode well for the prospects of separate Kraft and Heinz companies, Berkshire Hathaway notified the Securities & Exchange Commission it could potentially sell all its stock in the $26 billion (in sales) company it helped create in 2015.
The filing sent the beleaguered company’s stock to its all-time low, about $23 today (Jan. 28). It peaked at nearly $97 a share in February 2017.
Kraft Heinz filed a prospectus supplement on Jan. 20 with the SEC to notify the agency of Berkshire Hathaway’s intent -- “to register the potential resale by the Selling Stockholder of up to an aggregate of 325,442,152 shares of [Kraft Heinz] common stock.”
As the document itself warns, “The filing … does not necessarily mean that the Selling Stockholder will choose to sell any shares.” But with Greg Abel as CEO instead of Warren Buffett, Berkshire Hathaway, the largest investor in Kraft Heinz Co., is cutting its losses.
Buffett himself hinted the merger of Kraft and Heinz probably was his biggest mistake in 60 years of historically successful investing. “It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking them apart will fix it,” he told CNBC last September, two days after Kraft Heinz announced it was splitting into two companies sometime this year.
The Oracle of Omaha said he is opposed to the split but also sounded like there was nothing Berkshire Hathaway could do about it – despite his firm being by far the largest investor in the Pittsburgh-Chicago based food company, owning 27.5% of the stock.
Berkshire Hathaway and Brazilian investment fund 3G Capital paid $28 billion to buy H.J. Heinz Co. in 2013. Two years later, they paid Kraft shareholders $10 billion in cash to agree to a merger of publicly held Kraft with Heinz. All told, the deal was estimated to be worth nearly $50 billion.
Presuming Berkshire put as much cash into the two deals as its partner 3G Capital did, Berkshire spent about $19 billion to now own just over a quarter of a company currently valued at about $28 billion. Kraft Heinz was valued at $115 billion in early 2017.
3G Capital sold all its holdings in Kraft Heinz, last estimated at 16%, in 2023.
Kraft Heinz continues planning for a split into two publicly traded companies, one focused on condiments and sauces, the other on general grocery products. Neither company has been named yet. On Jan. 1, Steve Cahillane was hired as CEO. He was CEO when Kellogg Co. split into two companies back in October 2023.
About the Author
Dave Fusaro
Editor in Chief
Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.