Berkshire Hathaway, under the leadership of Greg Abel, is moving to fully divest its stake in Kraft Heinz, finalising a separation that has been months in the making. According to a recent filing, Berkshire is seeking to sell its 28 per cent stake in the packaged foods company, marking the end of a decade-long period of underperformance. This move follows Berkshire’s decision last May to relinquish its seats on Kraft Heinz’s board. Kraft Heinz is a global food and beverage company, offering a diverse portfolio of brands. Berkshire Hathaway is a multinational conglomerate holding company.
In August, Berkshire took a $US3.8 billion impairment charge on its stake, reflecting the continued decline in Kraft Heinz’s stock value. Last September, Kraft Heinz announced plans to essentially undo the $US46 billion mega-merger that Warren Buffett had championed and helped finance a decade earlier. Despite the initial investment remaining profitable, Kraft Heinz shares have plummeted by over 70 per cent since the end of 2017.
While Berkshire’s exit from Kraft Heinz was anticipated, the timing coincides with Abel’s recent appointment to a leading role at Berkshire, just 21 days prior. Abel has already initiated changes within the management team, including the addition of a general counsel, a first for the company in many years. He also oversaw the departure of two key executives.
Furthermore, Berkshire Hathaway is currently holding $US382 billion in cash reserves, which has led to renewed calls from investors for the introduction of a dividend, a move that was historically against Buffett’s policies. This decision underscores Abel’s proactive approach to reshaping Berkshire Hathaway’s investment portfolio and strategic direction.
