The long goodbye to the “3G Experiment” may finally be here.
Berkshire Hathaway, the largest shareholder of Kraft Heinz (KHC), has filed a prospectus to register the potential resale of its entire 27.5% stake (325.4 million shares). This move signals that the conglomerate is preparing to exit a decade-old investment that Chairman Warren Buffett has candidly admitted “did not work out.”
📉 THE CONTEXT:
- The Stake: Valued at ~$7.7 billion (based on Tuesday’s close).
- The Trigger: The filing follows Kraft Heinz’s September announcement that it plans to split into two companies later this year—a strategy that Buffett and current Berkshire CEO Greg Abel publicly disapproved of.
- The Performance: Berkshire has already absorbed massive pain here, writing down the investment by $3.76 billion last August, on top of a $3 billion writedown in 2019.
🛑 THE “ZERO-BASED” LEGACY: This marks the unwinding of the 2015 merger engineered by Berkshire and 3G Capital.
- The Theory: Combine big brands, apply zero-based budgeting, and cut costs to boost margins.
- The Reality: Underinvestment eroded brand equity, allowing healthier/private-label competitors to steal market share. 3G Capital fully exited its stake in 2023; Berkshire appears ready to follow suit.
💡 ANALYST TAKEAWAY: While this is a “potential” resale filing, the message is clear: the new leadership at Berkshire (Abel) is cleaning house. The refusal to support the company split likely accelerated the decision to head for the exit. For KHC investors, this creates a massive stock overhang—knowing 27.5% of the float is effectively in the shop window will likely cap any near-term rallies until the block is cleared.
👇 Value Investors: Is this the final proof that the “cost-cutting” model doesn’t work for legacy consumer brands, or was this just poor execution?