According to Warren Buffett on CNBC, the Kraft Heinz merger will result in Berkshire Hathaway owning 320 million shares of the combined company when it is expected to close during the second half of 2015. At Kraft’s (KRFT) closing price yesterday of $83 per share, after a $16.50 cash dividend to current KRFT shareholders, the resulting price of $66.50 implies a valuation of about $21 billion for Berkshire’s holding in this company. This will represent Berkshire’s second largest common stock investment, trailing only Wells Fargo ($26 billion). Since Berkshire will own 26% of Kraft Heinz, the new company is being valued at about $80 billion.
Kraft Heinz Is Berkshire Hathaway’s Second Largest Common Stock Investment
David I Kass Clinical Associate Professor, Department of Finance Ph.D., Harvard UniversityRobert H. Smith School of Business 4412 Van Munching Hall University of Maryland College Park, MD 20742-1815 Phone: 301-405-9683 Email: firstname.lastname@example.org (link sends e-mail)Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance, and is the Faculty Champion for the Accelerated Finance Fellows. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Dr. Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), Fox TV, American Public Media's Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by Bloomberg News and The Wall Street Journal, where he has primarily discussed Warren Buffett and Berkshire Hathaway. He has also launched a Smith School “Warren Buffett” blog. Dr. Kass has accompanied MBA students on trips to Omaha for private meetings with Warren Buffett, and Finance Fellows to Berkshire Hathaway’s annual meetings. He is an officer of the Harvard Business School Club of Washington, DC, and is a member of the investment and budget committees of a local nonprofit organization. Dr. Kass received a Smith School “Top 15% Teaching Award” for the 2009-2010 academic year.