Buffett Says ‘Answer Is No’ on Kraft Heinz Buying MondelezBy and
Shares tumble after he tamps down speculation on CNBC
Maker of Oreos has been cited as possible target for Kraft
Warren Buffett, the billionaire chairman and chief executive officer of Berkshire Hathaway Inc., sent shares of Mondelez International Inc. tumbling on Wednesday after tamping down speculation that Kraft Heinz Co. will acquire the snack giant.
When asked whether Kraft Heinz might buy a company like Mondelez, he told CNBC, “I think the answer is no on that.” Berkshire is the largest shareholder in Kraft Heinz and controls the company along with private equity firm 3G Capital.
After Kraft Heinz’s rebuffed attempt to acquire Unilever earlier this year, investors have been pondering whether the company will go after another big consumer-products maker. Mondelez, the maker of Oreos and Triscuits, is often cited as a possibility -- in part because it used to be part of Kraft. The two companies split up in 2012, a breakup intended to help Mondelez focus on global markets.
Buffett’s remarks sent Mondelez down as much as 3.6 percent to $40.39, the biggest intraday decline since February. Other packaged-food makers also fell in the wake of the comments. Campbell Soup Co. and General Mills Inc. both dropped into negative territory, and Kellogg Co. slipped as much as 1.2 percent.
Mondelez owns dozens of well-known brands, including Honey Maid, Nutter Butter, Tang and Trident. But Buffett said that acquiring a stable of brands alone doesn’t make a deal worthwhile.
Bigger Isn’t Better?
“There’s not the additive factor if you have 10 big brands versus one,” he told CNBC. “If you decide to buy a Coca-Cola or a Sprite -- both from Coca-Cola -- the one doesn’t influence the other.”
Berkshire is the top investor in Coca-Cola Co., and Buffett often uses the company as a benchmark for the kind of investments he looks to make.
“Having a group of brands doesn’t transition to that much more bargaining power,” the 87-year-old said.
Buffett had been ready to help finance Kraft Heinz’s bid for Unilever in February. But when the European company balked at the takeover, Kraft Heinz withdrew its offer. One of Buffett’s investing principles is not to chase hostile deals.
“We did not intend for that to be hostile, but it turned out it was,” Buffett said on Wednesday. “It was a misunderstanding.”
— With assistance by Craig Giammona