Warren Buffett Refutes Reports Of Tensions With 3G Capital

Jayson Derrick

Tue, Jun 25, 2019, 9:18 AM

In this article:

Warren Buffett told CNBC reports of any tension with 3G Capital related to their joint Kraft Heinz Co (NASDAQ: KHC) investment are untrue.

What Happened

Buffett's Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) teamed up with 3G Capital to become a major shareholder of the food company in 2015. Buffett admitted in early 2019 that Berkshire overpaid for the deal and the stock is down more than 50% in the past 12 months amid underperformance and accounting problems.

The poor performance at Kraft Heinz led to some speculation of tension between Buffett and his 3G Capital partners. However, CNBC's Becky Quick confirmed Tuesday on "Squawk Box" that Buffett still considers 3G co-founder Jorge Paulo a "good friend."

Why It's Important

Buffett and Berkshire Vice Chairman Charlie Munger fielded a question at the Berkshire annual shareholder meeting relating to their partnership with 3G. According to CNBC, Munger said Berkshire and 3G took part in "a long series of transactions that worked very well" but the Kraft Heinz marks "one transaction at the end that didn't work so well."

Munger also said it's "not at all inconceivable that we could be partners in some other transaction in the future.

What's Next

One of the key issues Kraft Heinz will need to address moving forward is the $31 billion debt load. Quick quoted Buffett as saying it will "take time to whittle that down." Meanwhile, Kraft Heinz announced Miguel Patricio will take over as CEO and he has the full support of Buffett and Berkshire Hathaway Vice Chairman Greg Abel who also sits on Kraft Heinz's board.

"Greg's spent time with him, I haven't," BUffett told CNBC. "But Greg is high on him and consequently I'm high on him."

Kraft Heinz stock closed Monday at $30.52 per share.

Related Links:

Warren Buffett Acknowledges Overpaying For Kraft

Buffett, Other Kraft Heinz Institutional Investors Left With Mustard On Their Shirts

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Warren Buffett Refutes Reports Of Tensions With 3G Capital

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