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Berkshire CEO Abel praises Kraft Heinz for turnaround on planned split

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Berkshire Hathaway’s new CEO likes the surprise course reversal announced this week by its new CEO Kraft Heinz.

In the food company 4th quarter earnings releaseSteve Cahillane has since said joined the company five weeks ago he found that “opportunities are greater than expected and many of the challenges we face are solvable and within our control.”

As a result, he decided to “pause work” on Kraft’s separation from Heinz. announced last September. That would essentially reverse the merger that Warren Buffett helped orchestrate in 2015.

Berkshire is KHC’s largest shareholder, with a 27.5% stake currently valued at $8.1 billion.

Berkshire CEO Greg Abel confirmed the change in a statement to CNBC and other news organizations. “We support CEO Steve Cahillane and the Kraft Heinz Board’s decision to pause work on the company’s previously planned separation, under Steve’s new leadership. As a result, management may be committed to strengthening Kraft Heinz’s ability to compete and serve customers.”

Characters at the booth of Berkshire Hathaway company Kraft Heinz pose with a reporter during shareholder shopping day as part of the Berkshire Hathaway annual meeting weekend on May 5, 2017 in Omaha, Nebraska.

Rick Wilking | Reuters

Buffett, who is not usually critical of the management of a Berkshire conglomerate, expressed unusual disapproval when spin-off plans were made public more than five months ago.

In an off-camera phone conversation with CNBC’s Becky QuickHe said he was “disappointed” and did not rule out selling some or all of his Berkshire shares.

“It certainly wasn’t a great idea to put them together, but I don’t think taking them apart would solve the problem.”

Just three weeks ago, Abel appeared to signal a sharp decline Berkshire’s KHC position SEC registrationfor “potential resale” of up to 99.9% of the 325.6 million shares it reported holding as of Sept. 30.

Kraft Heinz’s decision to remain intact May Help prevent potential sales from becoming reality.

Did Berkshire’s preparations for the KHC stake sale play a role in Cahillane’s comeback?

I don’t know for sure, but if so, and if this was a deliberate effort to pressure KHC, it would be a significant departure from Buffett’s longstanding hands-off policy when it comes to companies in Berkshire’s stock portfolio.

Kraft Heinz shares fell Wednesday morning when the reversal of the split was announced, but quickly recovered to end the week with a small gain of 0.7%.

Upcoming attractions

Berkshire Hathaway is expected to file its latest portfolio snapshot with the SEC after the closing bell on Tuesday.

It will disclose the stocks it owns as of December 31, the end of the fourth quarter.

between key questions:

Greg Abel speaks at the Berkshire Hathaway Annual Shareholder Meeting on May 4, 2024 in Omaha, Nebraska.

CNBC

Looking further ahead, Greg Abel’s first annual letter to shareholders will be published around 8 a.m. ET (7 a.m. CT) on Saturday morning, February 28. Berkshire’s newsletter.

The company’s annual report and fourth-quarter earnings release will be released simultaneously, along with information about Berkshire’s May 2 shareholder meeting.

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HIGHLIGHTS FROM CNBC’S BUFFETT ARCHIVE

Book recommendations by Buffett and Munger (1994)

AUDIENCE QUESTION: What were the three best books you read outside the investment field last year? Why not – even one will do it.

WARREN BUFFET: I’ll give it to you – I’ll tout a book I’ve read first but isn’t available yet. But it will be in September.

I believe the woman who wrote this was in the audience and Biography of Ben GrahamIt will be available in September from Janet Lowe. I read it too and I think those interested in investments will definitely enjoy it. He did a good job catching Ben.

One of the books I enjoyed very much was written by a shareholder who is not here because he is sworn in today or tomorrow, maybe tomorrow, as president of the Voice of America.

This is Geoff Cowan’s book, “People against Clarence DarrowThis is the story of the Clarence Darrow trial of the McNamara brothers for bribing the jury in Los Angeles around 1912. Los Angeles Times.

A fascinating book. Geoff uncovered much information not found in previous biographies of Darrow. I think you’ll like this…

Charlie Munger: I really liked Connie Bruck’s biography Master of the GameIt was a biopic of Steve Ross, who headed Warner and later became co-chairman of Time Warner.

WARREN BUFFET: Yes, a little more than a co-chairman. (Laughs)

Charlie Munger: Yes, and — he’s a very insightful writer and a very interesting story.

I’m re-reading a book by Van Doren that I really liked. Biography of Benjamin Franklinreleased in 1952 [1938]and I almost forgot what a good book it is. And it’s available in paperback everywhere. There has never been anyone like Franklin in this country. Never again.