Brazilian private equity firm 3G Capital quietly sold off its 16.1% stake in Kraft Heinz in the fourth quarter, nearly nine years after masterminding the blockbuster merger of Kraft Foods and Heinz with Warren Buffett.
“3G has not been involved in the management of Kraft Heinz, nor have they been on the Board for several years.
They had continued to be an investor and were treated as we do any investor,” Kraft Heinz said in a statement to CNBC.
“We did learn from their recent filing that 3G exited the Kraft Heinz stock entirely in 2023.”
Kraft Heinz sought to drive inorganic growth through a takeover bid for Unilever, but the Popsicle owner rejected its offer.
Kraft Heinz disclosed his departure in a regulatory filing but no press release — or fanfare — accompanied it.
In 2022, it distributed about 7% of Kraft Heinz to investors in its fund, which reportedly included tennis star Roger Federer.
Last year, Kraft Heinz tapped Carlos Abrams-Rivera as its new chief executive.
Nearly nine years after orchestrating the successful merger of Kraft Foods and Heinz with Warren Buffett, Brazilian private equity firm 3G Capital quietly sold off its sixteen percent stake in Kraft Heinz in the fourth quarter.
With the sale, a chapter in 3G’s history closes. The company’s sway over Kraft Heinz has been decreasing as of late, going from three board seats to none by July 2022.
“For a number of years, 3G has not served on the Kraft Heinz board or in the management of the company. They were handled the same as any other investor and had continued to be an investor, Kraft Heinz said in a statement to CNBC. “We did discover from their most recent filing that 3G completely stopped holding Kraft Heinz stock in 2023. “.”.
The business also stated that Buffett’s Berkshire Hathaway, which holds the largest stake in the company (268.8%), is a devoted long-term owner.
A request for comment from CNBC was not immediately answered by 3G.
On Valentine’s Day of 2013, Berkshire and 3G announced their partnership to take Heinz private, sparking the start of their tragic romance. Two years later came the merger with Kraft Foods.
Thanks to 3G’s preferred cost-cutting strategy, the new company first impressed investors with its earnings growth. The company had previously achieved success with that tactic when it took Burger King private and increased sales, as well as when it formed the beer giant Anheuser-Busch InBev through a series of megamergers.
However, there were new difficulties in the packaged food industry. People started consuming more fresh food. Big Food’s customers were also being taken by private-label brands sold by retailers and newbies who positioned themselves as a healthier alternative. Kraft Heinz made a takeover offer for Unilever in an attempt to spur inorganic growth, but the owner of Popsicle rejected the offer.
Then, in 2019, Kraft Heinz had a terrible quarter. The company slashed its dividend, revealed a Securities and Exchange Commission probe into its accounting practices, and wrote down its brands by $15 billion all in one earnings report.
After some months, Buffett claimed to CNBC that Berkshire and 3G overpaid for Kraft Heinz because they believed its brands were worth more than they actually were. He nevertheless supported Kraft Heinz and 3G. Some investors attributed 3G’s problems to its aggressive cost-cutting measures.
Jorge Paulo Lemann, a founding partner of 3G, left Kraft Heinz’s board in 2021. Fellow founding partner Alexandre Behring departed the board the following year. Furthermore, the last member of the 3G board, former CEO of AB InBev Joao Castro-Neves, resigned two months after Behring did. In a regulatory filing, Kraft Heinz revealed his resignation; however, there was no accompanying press release or fanfare.
Since 2018, 3G has been reducing its ownership of Kraft Heinz on an irregular basis. At the height of the company’s problems in 2019, when it sold 25 million shares, the stock dropped 4% as a result of the disclosure. About 7% of Kraft Heinz was distributed in 2022 to fund investors, who reportedly included tennis player Roger Federer.
Carlos Abrams-Rivera was appointed as Kraft Heinz’s new CEO last year. Despite joining the company in 2020, he is noteworthy for being the first CEO to have no connection to 3G.
