(BRK.A), (BRK.B)
Kraft Heinz is looking to acquire Campbell according to a report in the New York Post.
According to the Post, Kraft Heinz assumes that the soup company’s strategic review will lead to a sale, especially after its stock has tumbled 21% in the past six months, and it wants to be first in line.
In addition to its familiar soups, Campbell owns a host of top brands, including Pepperidge Farm breads, cookies and Goldfish crackers; Royal Dansk and Kjeldsens cookies; V8 beverages; Bolthouse Farms beverages, carrots and dressings; Plum Organics baby food; Swanson broths; Prego pasta sauces; Garden Fresh Gourmet fresh refrigerated salsas, dips and hummus, and Pace sauces.
Campbell has been seeking to spur its own growth through acquisition. In March, Campbell created a new snack division after its $4.87 billion cash acquisition of snack-maker Snyder-Lance. The deal was financed with $5.3 billion of bonds.
The company is projecting $10 billion in annual revenue from its snack brands, however the acquisition price was considered steep to say the least.
Ask any analyst about potential Berkshire Hathaway acquisitions and Campbell usually finds its way on the list.
Kraft Heinz was rebuffed in its megadeal for Unilever in February 2017, so smaller deals look to be the way forward for now.
With 3G Capital’s Bernardo Hees at the helm, Kraft Heinz has been in relentless cost-cutting mode since 2015, and Campbell has been in the midst of its own $500 million effort, so it’s not clear how much more savings Kraft Heinz can wring out of it.
In any case, Kraft Heinz, which is in third place worldwide among global food conglomerates, is clearly looking to move up the chart. With Berkshire’s money behind it, there’s little doubt they will.
© 2018 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.