Wall Street shared Buffett’s disappointment.
Kraft Heinz shares fell by 7.6% on Tuesday after announcing early that morning, but recovered some of that losses and closed just 2.4% in a short holiday week.
Does Buffett’s misfortune encourage Berkshire to sell some or all of its interests?
He didn’t rule it out.
Buffett added: “If approached for the sale of stock, we will not accept block bids unless the same offer is made to other Kraftheinz shareholders.” That is, unless someone is willing to buy the entire company.
Becky reported that Buffett doesn’t like the $300 million extra cost of the additional overhead costs spent on implementing the split next year.
“It certainly wasn’t a great idea to put them together, but I don’t think we’ll fix it by breaking it down.”
In 2013, Berkshire worked with Brazil’s 3G Capital Management to purchase HJ Heinz for $23.3 billion.
Two years later, when Kraft merged with Heinz, Berkshire emerged in more than 325 million shares in the new company, valued at about $24 billion when trading closed in July 2015.
The value of Berkshire stocks worked well shortly after the merger, rising to around $30 billion in 2016, but slipped sharply over the next three years, bouncing around $10 billion since 2020.
In a 2015 letter to shareholders, Buffett wrote $9.8 billion for the equity cost Berkshire, which is currently losing about $1 billion.
Berkshire wrote down its investments for $3.8 billion in the second quarter to better reflect the market value. He wrote $3 billion in 2019.
In a 2019 live CNBC interview with Becky Quick, Buffett regrets Berkshire’s role in the Kraft Heinz merger, saying he’s “overpaying” for a good company.
The stock price fell 69% since the merger ended.
The split wasn’t a complete surprise.
In July, the Wall Street Journal reported that Kraftheinz “wields a large portion of its grocery business, including many craft products.”
The two Berkshire executives resigned from the KHC board in May after revealing a “continued assessment of strategic transactions to unlock shareholder value.”
According to one analyst, these resignations prompted Berkshire to start selling and “create stock overhangs.”
That overhang is now even more ominous.
Berkshire owns more than 10% of KHC shares, so you must report sales in the open market within two business days. This will also encourage other investors to sell.
Buffett is not alone in his criticism of the division.
The Financial Times writes, “In the heart, the problem with Kraft Heinz is that it has not been able to accommodate changes in consumer preferences.” They believe that splitting is “a result of years of performance caused by prioritizing (UK spelling) costs less than innovation, rather than bold strategic pivots.”
Reuters columnist Jennifer Sabah calls it “a remake of a sausage… just as unpleasant as ever.”
“Even though we produce a wide range of brands, the endless cycle of Wheeling and Dealing appears to be just one offensive flavor with “incredibly optimistic” financial engineering.”
Buffett around the internet
Some links may require a subscription.
Highlights from the archive
Why Berkshire is Too Many Crafts (2019)
Warren Buffett admits that Berkshire Hathaway paid too much for craft in his merger with Heinz, citing the increased pricing power of retailers over brands.
Berkshire Stock Watch
Berkshire’s top US ownership – September 5, 2025
Berkshire Top Holdings is making public stocks publicly available in the US, Japan and Hong Kong by market value based on today’s closing price.
Holdings are as of June 30, 2025, as reported in Berkshire Hathaway’s 13th Floor Submission on August 14, 2025.
A complete list of Holdings and current market values is available from the Berkshire Hathaway Portfolio Tracker at CNBC.com.
Questions and comments
Send questions or comments about the newsletter to alex.crippen@nbcuni.com. (I’m sorry, but I won’t forward any questions or comments to Buffett himself.)
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Also, Buffett’s annual letter to shareholders strongly recommends reading. Collected here on the Berkshire website.
– Alex Crippen, Editor, Warren Buffett Watch
