At Kraft Heinz, a fed investigation and a $15.4B write-down

[Eugene]

Source: Associated Press

At Kraft Heinz, a fed investigation and a $15.4B write-down

February 22, 2019

PITTSBURGH (AP) — Kraft Heinz disclosed an investigation by federal regulators and said it will slash the value of its Oscar Mayer and Kraft brands by $15.4 billion, major setbacks for a company trying to revitalize its stable of household-name brands.

A wave of bad news, which also included a dividend cut and a weak outlook for the year, sent shares plunging 26 percent at the opening bell Friday, their largest decline in a single day. Before noon, the company had lost $16 billion of its market value.

Kraft Heinz cited the impairment charge for a stunning $12.6 billion fourth-quarter loss.

Kraft Heinz said the investigation by the U.S. Securities and Exchange Commission is related to its accounting practices in the division that handles interactions with suppliers. The SEC declined to comment.

The steep write-down and loss in the quarter is a devastating recognition that efforts to change the trajectory of the company have not been as successful as once thought.

-snip-

Read more: https://apnews.com/45870d60dba244e7b0571192dccbf1a9

[Wellstone ruled]

1. You just knew this was going to happen.

Remember the Wall Street Story being,Buffett and the Bacartti Brothers paid about 15 billion premium for Kraft and Heinz Merger.

Oscar Mayer has been in a world of hurt for years. Changes in diets have kill their main cash cow the Sausage Business. Their Pork Processing Plants are old school at best.

And Kraft Foods in in the same pickle as Oscar. Again it is all about changes in diets of the consumer.

[mahatmakanejeeves]

2. Warren Buffett: I Overpaid for Kraft Heinz

BUSINESS
Warren Buffett: I Overpaid for Kraft Heinz
Berkshire Hathaway doesn’t plan to change its ownership stake in Kraft Heinz despite the struggles, he says

By Nicole Friedman
Updated Feb. 25, 2019 8:21 a.m. ET

Warren Buffett said Berkshire Hathaway Inc. BRK.B +0.78% and 3G Capital overpaid in 2015 when they helped Heinz buy Kraft to form Kraft Heinz Co. ..., but he has no plans to sell.

The acknowledgment, made during a CNBC interview Monday, followed a disclosure Saturday that Kraft Heinz contributed a $2.7 billion loss to Berkshire Hathaway in 2018. Kraft Heinz last week wrote down the value of some of its biggest brands, disclosed an investigation by federal securities regulators and slashed its dividend. ... Mr. Buffett’s Berkshire Hathaway owns 27% of Kraft Heinz.

“The interesting thing about Kraft Heinz is it’s still a wonderful business,” Mr. Buffett said. But “the business does not earn more because you pay more for it.”

Berkshire and Brazilian private-equity firm 3G Capital partnered in 2013 to buy Heinz and then financed Heinz’s 2015 merger with Kraft. Mr. Buffett on CNBC said Berkshire Hathaway doesn’t plan to change its ownership stake in Kraft Heinz despite the struggles. ... “We don’t pull the plug…It isn’t our style,” he said.
....

Mr. Buffett, a longtime Democrat, also said he would support Michael Bloomberg if he announced a presidential run. Mr. Buffett campaigned for Hillary Clinton in 2016. Of Mr. Bloomberg, Mr. Buffett said, “I think he knows how to run things.…He understands people, he understands the market system and he understands the problems of people” who don’t benefit from the market system. ... Mr. Buffett said it would be a mistake for Howard Schultz to run as an independent candidate, because he would take votes away from a Democratic candidate. ... “I hope no third-party candidate runs,” he said.

Write to Nicole Friedman at [e-mail]