Kraft Heinz is about to divide a decade after Warren Buffett has helped orchestrate his creation, in which many observers now consider it to be a rare stain in the long successful business of the legendary “Omaha Oracle”.
After 10 years of marriage of the two food sector giants, which has been sponsored by, Kraft and Heinz will now separate.
Heinz was initially acquired in 2013, for $ 23 billionby a Berkshire Hathaway consortium of Buffett with the Brazilian Risk Capital Company 3G Capital, recalls the.
In 2015, in a transaction that involved about 40 billion dollarsHeinz was fused with Kraft, an operation that Warren Buffett greeted at the time as “My type of business“Praising the strength of how Heinz’s ketchup or Kraft’s Oscar Mayer sausages.
However, over the years, the combined food giant has discussed with changes in consumer tastesaggressive cost cuts and increasing contrary winds in the industry.
A partnership with 3G marked a removal from the approach Typical of Buffett. While Berkshire usually favors a non-interventionist stylewhich privileges long -term stability, 3G is known for cost and reformulate management to rapidly increase evaluations.
After the merger, Kraft Heinz suffered Mass Disposaldevaluations in the amount of thousands of millions, asset sales and an accounting audit. Analysts, including Harvard Business Review, argued that strict austerity measures “They significantly harmed” innovation.
Own Buffett recognized the false steps. At the 2019 Berkshire shareholder meeting, he admitted to having too much paid for kraftand this week told CNBC that it was “disappointed” with the unfolding of events.
Although I recognized that, looking back, The merger was recklessthe billionaire expressed doubts that the separation of the company resolved its deeper problems.
On Tuesday, Kraft Heinz announced plans to two business Separated. One will focus on sauces, folders to block and spices under brands such as Heinz, Kraft Mac & Cheese and Philadelphia. The other will focus on US basic products such as Oscar Mayer, Kraft Singles and Lunchables.
The company anticipates about $ 300 million in “desynergies” separation, but intends to compensate for some of the costs.
The market reaction has been, in better of the hypotheses, moderate. KRAFT HEINZ actions already lost more than 70% of their valueR from the peak in 2017, eliminating tens of thousands of millions in scholarship capitalization.
The company, once valued at over 110 billion dollarsis now below 33 billion. The news of the division triggered another massive sale, although its quotation has slightly recovered after an initial drop of 7%.
For Berkshire, which holds 27.5% of Kraft Heinz, the investment performed lower than the global market for a consistent margin.
Buffett did not exclude coming to sell the participationsaying that it would act in the best interest of Berkshire. 3G Capital, however, has already lefthaving sold in 2023 the actions that still held.
Owner of a long and hits -filled career, Warren Buffet does not always get it right, and is usually admitting his failures. In 2021, the billionaire assumed when he acquired, in 2016, the Precision Castpartsfor 32.1 billion euros. He also confessed, recalls Insider, having been a misleading mistake Dexter Shoe purchase in 1993.
But in the career story of the legendary US billionaire, considered the “guru” of investment markets and very ants of tiktoks, these errors will only be a footnote.
