Warren Buffett appeared to put a damper on speculation that Kraft Heinz will make a play for Campbell Soup by remarking that it’s “very hard” to make a high bid for any packaged-goods company.
In an interview with CNBC, Buffett, whose Berkshire Hathaway investment firm is Kraft Heinz’s largest single stockholder, said, “I think it’s very hard to offer a significant premium for a packaged-goods company and have it make financial sense. The packaged-goods business makes high returns on tangible assets that it has, but it is a tougher business than it was 10 years ago.”
Campbell has been roiled in the wake of CEO Denise Morrison’s departure in May. Interim CEO Keith McLoughlin recently announced plans to get rid of Campbell’s fresh-food business and other acquisitions under Morrison. Activist investor Dan Loeb, meanwhile, has been pushing to oust Campbell’s entire board to force a sale of the company.
Buffett indicated in the CNBC interview that in his opinion, Campbell sold the wrong business units.
“I don't think, in terms of any other companies looking at [Campbell] for acquisition, they’re probably selling the assets that those companies are looking for,” he said.
Campbell’s earnings declined 67% from 2017 to 2018.