Date
22 September 2019
Warren Buffett said he was "wrong in a couple of ways" on the investment in Kraft Heinz. Photo: Reuters
Warren Buffett said he was "wrong in a couple of ways" on the investment in Kraft Heinz. Photo: Reuters

Berkshire overpaid for Kraft Heinz, Buffett says

Warren Buffett acknowledged on Monday that his Berkshire Hathaway overpaid in the 2015 merger that created Kraft Heinz Co, but said he has no plans to exit the struggling packaged foods firm, Reuters reports.

“I was wrong in a couple of ways on Kraft Heinz,” the legendary investor said on CNBC television. “We overpaid for Kraft.”

He was speaking four days after Kraft Heinz took a US$15.4 billion writedown for its Kraft and Oscar Mayer brands and other assets, slashed its dividend, and said the US Securities and Exchange Commission was probing its accounting.

Kraft Heinz’s share price sank 27.5 percent last Friday, wiping out more than US$16 billion of market value, and causing Berkshire to lose US$4.3 billion on its stake.

Berkshire owns 26.7 percent of Kraft Heinz.

Buffett did not say by how much Berkshire overpaid, but the comments marked a rare admission of error by the 88-year-old billionaire on a major investment at his conglomerate, Reuters noted.

Despite the misstep, Buffett said he has “absolutely no intention” of adding to or reducing Berkshire’s stake in Kraft Heinz, saying the firm had “very, very strong” brands and that he would be happy to own it a decade from now.

Berkshire and Brazilian private equity firm 3G Capital combined the former Kraft Foods with H.J. Heinz, which they bought in 2013, and own about half of the merged company.

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