Brazilian private equity firm 3G Capital quietly sells its 16.1% stake Kraft Heinz The fourth quarter marked nearly nine years since Warren Buffett orchestrated the blockbuster merger of Kraft Foods and Heinz.
The sale marks the end of the 3G era. The company’s influence over Kraft Heinz has been declining in recent years, dropping from three board seats to zero as of July 2022.
“3G has not been involved in the management of Kraft Heinz and has not been on the board of directors for many years. They remain investors and are treated the same as we would any investor,” Kraft Heinz said in a statement to CNBC. “We do We understand from their most recent filing that 3G will fully exit Kraft Heinz stock in 2023.”
The company added that Buffett’s Berkshire Hathaway is its largest shareholder with a 26.8% stake and is a committed long-term owner.
Heinz Kraft Ketchup arranged on Tuesday, July 25, 2023 in Hastings-on-Hudson, New York, United States.
Tiffany Hagler-Gilder | Bloomberg | Getty Images
The doomed love affair between Berkshire Hathaway and 3G began on Valentine’s Day 2013, when the two companies announced they were joining forces to take Heinz private. Two years later it merged with Kraft Foods.
The new company initially pleased investors with its profit growth, thanks to the cost-cutting approach favored by 3G. The company created beer giant Anheuser-Busch InBev through a series of mega-mergers and took Burger King private and revived its sales, a strategy that has paid off.
But the packaged food business presents new challenges. Consumers are turning to eating more fresh foods.Additionally, retailers’ private labels and new entrants brand themselves as Healthier options take customers away from big food companies.Kraft Heinz tries to drive inorganic growth with Unilever acquisition, but Popsicle owner reject its quote.
Then Kraft Heinz had a disastrous quarter in 2019. In an earnings report, the company slashed its dividend, disclosed an SEC investigation into its accounting practices and wrote down $15 billion in brand equity.
Months later, Buffett told CNBC that Berkshire Hathaway and 3G had overpaid for Kraft Heinz, fueled by optimism that the Kraft Heinz brand was worth more than it was actually worth. Still, he supports 3G and Kraft Heinz. Other investors blame 3G’s aggressive cost cutting for the company’s woes.
Kraft Heinz went into turnaround mode as 3G handpicked the food giant’s new chief executive, an Anheuser-Busch InBev veteran, in an effort to reverse the company’s downward spiral. The company announced plans to increase marketing and advertising spending and change its strategy for producing new products. To reduce the risk of private-label competition, the company also sold its cheese business to French dairy giant Lactalis and its Planters nut brand to French dairy giant Lactalis. Hormel.
In 2021, 3G founding partner Jorge Paulo Lemann resigned from the Kraft Heinz board of directors. The following year, founding partner Alexandre Behring left the board. Two months after Belin’s departure, 3G’s last board member, former AB InBev CEO Joao Castro-Neves, also resigned. Kraft Heinz disclosed his departure in a regulatory filing without any press release or fanfare.
3G has been regularly reducing its stake in Kraft Heinz since 2018. In 2019, at the height of the company’s troubles, the company sold 25 million shares, a disclosure that sent its shares down 4%. In 2022, it distributed about 7% of Kraft Heinz shares to investors in its funds, which It is said Among them is tennis star Roger Federer.
Last year, Kraft Heinz named Carlos Abrams-Rivera as its new chief executive. Although he has been with the company since 2020, it is worth noting that he is the company’s first CEO not related to 3G.
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