Warren Buffett: I Overpaid for Kraft Heinz
25 Febrero 2019 - 7:03AM
Noticias Dow Jones
By Nicole Friedman
Warren Buffett said Berkshire Hathaway Inc. and 3G Capital
overpaid in 2015 when they helped Heinz buy Kraft to form Kraft
Heinz Co., but he has no plans to sell.
The acknowledgment, made during a CNBC interview Monday,
followed a disclosure Saturday that Kraft Heinz contributed a $2.7
billion loss to Berkshire in 2018. Kraft Heinz last week wrote down
the value of some of its biggest brands, disclosed an investigation
by federal securities regulators and slashed its dividend.
Mr. Buffett's Berkshire Hathaway owns 27% of Kraft Heinz.
"The interesting thing about Kraft Heinz is it's still a
wonderful business," Mr. Buffett said. But "the business does not
earn more because you pay more for it."
Berkshire and Brazilian private-equity firm 3G Capital partnered
in 2013 to buy Heinz and then financed Heinz's 2015 merger with
Kraft. Mr. Buffett on CNBC said Berkshire Hathaway doesn't plan to
change its ownership stake in Kraft Heinz despite the
struggles.
"We don't pull the plug...It isn't our style," he said.
But he said he also wouldn't buy more Kraft Heinz, even after
its share prices slumped last week, because "it isn't worth as
much."
Mr. Buffett said on CNBC that Kraft Heinz's recent struggles
were the result of a loss of bargaining power with retailers and he
compared Kraft Heinz with Costco Wholesale Corp.'s Kirkland brand
to demonstrate how the retail environment is changing. Kraft Heinz
traces many of its brands back to the 19th century, while Kirkland
launched in recent decades. But Kirkland's sales exceeded Kraft
Heinz's last year, he said.
"So here they are, 100 years plus tons of advertising, built
into people's habits and everything else, and now Kirkland, a
private label brand comes along with only 750 outlets, does 50%
more business," Mr. Buffett said.
Berkshire Hathaway Inc. owns about 1% of Costco, according to
FactSet.
Write to Nicole Friedman at nicole.friedman@wsj.com
(END) Dow Jones Newswires
February 25, 2019 07:48 ET (12:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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