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3G in talks to acquire Kraft Foods


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He said on CNBC, that Berkshire will own 320M of the 1.22B shares outstanding after the deal is completed. So roughly 26% of the new entity, which along with 3G they will control 51%.

Price Paid: 9.5B or roughly $30 per share! So another 5B of the cash pile gets allocated wisely.

The stock is trading at $81 right now, of which $16.5 will be going out as a special dividend before Berkshire gets their shares. So effectively their cost basis will have more than doubled with KRFT at the $65 range and Berkshires stake will have exceeded 20B in a company with great brands, wonderful management and a forever holding. Classic WEB.

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I think you'll find that Berkshire owns 192,666 shares of Kraft before the deal.

 

you forgot to count BUffett has about 200m shares of kraft currently before the deal. He also get dividends on those

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Kraft Heinz will be public going forward.  Berkshire will own something like 26%, 3G 25% and former KRFT shareholders get 49% and their $16.50 per share cash dividend.

 

Is it that Kraft-Heinz will be public going forward?

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He said on CNBC, that Berkshire will own 320M of the 1.22B shares outstanding after the deal is completed. So roughly 26% of the new entity, which along with 3G they will control 51%.

Price Paid: 9.5B or roughly $30 per share! So another 5B of the cash pile gets allocated wisely.

The stock is trading at $81 right now, of which $16.5 will be going out as a special dividend before Berkshire gets their shares. So effectively their cost basis will have more than doubled with KRFT at the $65 range and Berkshires stake will have exceeded 20B in a company with great brands, wonderful management and a forever holding. Classic WEB.

 

The stock is at 81 now. But the new company will have different shares outstanding. So we can only say 81 is only an indication of what the new company will trade at?

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He said on CNBC, that Berkshire will own 320M of the 1.22B shares outstanding after the deal is completed. So roughly 26% of the new entity, which along with 3G they will control 51%.

Price Paid: 9.5B or roughly $30 per share! So another 5B of the cash pile gets allocated wisely.

The stock is trading at $81 right now, of which $16.5 will be going out as a special dividend before Berkshire gets their shares. So effectively their cost basis will have more than doubled with KRFT at the $65 range and Berkshires stake will have exceeded 20B in a company with great brands, wonderful management and a forever holding. Classic WEB.

 

The stock is at 81 now. But the new company will have different shares outstanding. So we can only say 81 is only an indication of what the new company will trade at?

 

1 share of Kraft will get you one share of Kraft Heinz. 

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He said on CNBC, that Berkshire will own 320M of the 1.22B shares outstanding after the deal is completed. So roughly 26% of the new entity, which along with 3G they will control 51%.

Price Paid: 9.5B or roughly $30 per share! So another 5B of the cash pile gets allocated wisely.

The stock is trading at $81 right now, of which $16.5 will be going out as a special dividend before Berkshire gets their shares. So effectively their cost basis will have more than doubled with KRFT at the $65 range and Berkshires stake will have exceeded 20B in a company with great brands, wonderful management and a forever holding. Classic WEB.

 

The stock is at 81 now. But the new company will have different shares outstanding. So we can only say 81 is only an indication of what the new company will trade at?

 

 

Ya looks like the market doesn't know the details of the share structure, it is at $88 now. BTW ( a bit of bragging sorry :) ) KRFT is a 10 bagger for me in 15yrs, albeit it started as a small part of MO.

 

 

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KRFT is a 10 bagger for me in 15yrs, albeit it started as a small part of MO.

 

Congrats. But how did you calculate your cost base with all the various mergers and splits? It is hard to believe that Kraft has done 16% CAGR over such a long period.

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KRFT is a 10 bagger for me in 15yrs, albeit it started as a small part of MO.

 

Congrats. But how did you calculate your cost base with all the various mergers and splits? It is hard to believe that Kraft has done 16% CAGR over such a long period.

 

Yes I just calculated it from the original MO shares. Each KRFT share came from 33% of the original MO share @ $25. Well this is how I calculate the basis for tax purposes anyway. I wonder how the actual KFT shares did, by itself.

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Guest wellmont

Looks like it's indeed 10b profit!

(81 - 16.5) * 588 / 0.49 * 1/4 = 19bn

 

And he has prefered stock in hein as well, right?

 

Yes but it will be refinanced in 2016 now.

 

just in time for the next bear market redeployment. how many moves ahead of everybody else is he?

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Guest longinvestor

Looks like it's indeed 10b profit!

(81 - 16.5) * 588 / 0.49 * 1/4 = 19bn

 

And he has prefered stock in hein as well, right?

 

Yes but it will be refinanced in 2016 now.

 

just in time for the next bear market redeployment. how many moves ahead of everybody else is he?

 

The timing of this was mostly determined by 3G's appetite for running (straightening out) Heinz, it took them about two years. Essentially, Berkshire tested the waters with 3G, liked what they saw and opened the check book. Both Munger and Buffett commented at the last annual meeting that Berkshire is learning a lot from 3G. With the growing operating biz side of Berkshire, it makes all the sense in the world to build the future system to include both the hands-off and hands-on approaches. In a sense, Sokol played the hands-on role for Berkshire, notably at Netjets. 

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KRFT is a 10 bagger for me in 15yrs, albeit it started as a small part of MO.

 

Congrats. But how did you calculate your cost base with all the various mergers and splits? It is hard to believe that Kraft has done 16% CAGR over such a long period.

 

Yes I just calculated it from the original MO shares. Each KRFT share came from 33% of the original MO share @ $25. Well this is how I calculate the basis for tax purposes anyway. I wonder how the actual KFT shares did, by itself.

 

I could be wrong but I think the actual Kraft shares have done terrible.  Kraft was spun off at $31 and was at $41 when Mondelez spun it off.  You got one share of Kraft for every three of Mondelez.  The Kraft stub has doubled in a short period of time but Mondelez has struggled.  For example if you had three shares to start with (3 x $31 = $93).  Today you would have 1 share of Kraft at $89 and 3 shares of Mondelez at $35.50.  (1 x $89 + 3 x $35.50 = $195)  Not much more than a double in 14 years excluding dividends.  Am I missing something?   

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