If it weren’t for the ketchup and the mac and cheese, Warren Buffett might have one fewer investment regret.
During a recent appearance on CNBC’s Squawk Box, Buffett revealed that he was “disappointed” in Kraft Heinz after he helped facilitate their merger in 2015.
Despite Buffett’s efforts, the companies are going to split. What’s worse, at least in Buffett’s opinion, is that the decision to split won’t be voted on by the shareholders.
Berkshire Hathaway, Buffett’s investment firm, has a 27.5 percent stake in the company valued at around $8.9 billion. It’s by far the company’s largest shareholder, and if it had a vote on the matter, the split might not be happening.
Buffett said the designated CEO of Berkshire Hathaway, Greg Abel, has directly expressed his disapproval with the company’s plan, and did so before the final decision to split was made.
It’s very unusual to see Buffett criticize one of his investment companies or its management.
Kraft Heinz announced the split on Tuesday, and its stock price dipped by 7.6 percent as a result. The stock bounced back a bit by the end of the week, ending just 2.4 percent below its pre-announcement price.
It’s unclear if Buffett is going to sell Berkshire Hathaway’s stake in the company, but Buffett made clear that option wasn’t off the table.
“We will proceed to do whatever we think is in the best interest of Berkshire,” Buffett said.
What he did make clear is that Berkshire Hathaway is not going to sell its shares to a potential buyer unless that buyer is willing to buy the entire company.
“If we are approached about selling our shares, we wouldn’t accept the block bid unless the same offer is made to other Kraft Heinz shareholders,” he said.
He admitted that merging the companies may have been a mistake, but also dismissed the idea that splitting them would help matters.
“It certainly didn’t turn out to be a brilliant idea to put them together, but I don’t think taking it apart will fix it,” Buffett said.
In 2019, he admitted during a CNBC interview that he had been “wrong in a couple of ways on Kraft Heinz” and that he had “overpaid for Kraft.”
It’s unclear what Kraft and Heinz will be called on the other side of the split.
Part of the struggle for Kraft was profiting from increasing food ingredient costs and an overall consumer shift towards healthier and less expensive snacks and condiments.
Since the Kraft Heinz merger in 2015, the company’s stock price has dropped 69 percent.