- Warren Buffett told CNBC Wednesday that Kraft Heinz was not interested in acquiring Mondelez, according to Bloomberg. Buffett is the chairman and CEO of Berkshire Hathway Inc., which is the largest shareholder in Kraft Heinz.
- Buffett’s announcement sent shares of Mondelez tumbling as much as 3.6% to $40.39. Mondelez, which makes Oreos and Triscuits, used to be part of Kraft, but the companies split in 2012.
- Kraft Heinz attempted to acquire Unilever earlier in 2017, with a $143 billion offer. The unsuccessful bid had investors wondering if Kraft Heinz would look to pick up a different large CPG maker, like Mondelez.
Buffett put to rest any speculation that Kraft Heinz Co. may be interested in acquiring Mondelez, telling CNBC, “I think the answer is no on that.”
His interview on CNBC impacted more than Mondelez's stocks. Campbell Soup Co. and General Mills Inc. both dipped into negative territory, and Kellogg Co. tumbled as much as 1.2%.
The recent merger of Amazon and Whole Foods has put a spotlight on big retailers and the advantages they have negotiating with retailers on CPG’s prices in today’s market. During the interview, Buffett acknowledged that Amazon could be considered on the same level as mega-retailers Wal-Mart and Costco.
“When you get strong retailers — a Wal-Mart, a Costco and now an Amazon — and they keep getting stronger, their position improves. Packaged foods have had more trouble,” Buffett told CNBC. This has some speculating that large food manufacturers like Kraft Heinz may be trying to grow through acquisitions to get on the same playing field.
Buffett also pointed out that the number of recognizable brands a company controls is not its greatest asset. Rather, it’s the power of those specific brands. This could be the reason Kraft Heinz is taking a pass at Mondelez. While the snack producer has a stable of household names — including HoneyMaid, Nutter Butter and Trident — Kraft Heinz may not see enough standout brands to make the acquisition worthwhile.
Buffett’s interview could not only be an indicator of where Kraft Heinz is going moving forward, but also what will happen with other large food manufacturers. They may take a note from his book and pump the brakes on mergers that may have seemed inevitable just days ago.