Berkshire Hathaway 2017 Annual Meeting Audience Question # 14

Berkshire committed to invest $15B in Kraft-Heinz’s failed bid for Unilever

Warren Buffett:

OK. Jay?

Jay Gelb:

Berkshire reportedly partnered with 3G and Kraft Heinz’s attempt to acquire Unilever for $143 billion.

How much was Berkshire willing to invest in this deal? And does this mean Berkshire’s next large acquisition is likely to be in partnership with 3G?

Warren Buffett:

Yeah, well, Kraft, I… you’d have to distinguish between two situations. Kraft Heinz was a widely-owned company in which we and 3G act as a control group and have a little over 50 percent of the stock.

But as originally contemplated… no certainty that this exactly is what would have happened… we would have invested an additional 15 billion and 3G would have invested an additional 15 billion if a friendly agreement could have been reached.

So if the deal had been made, if the independent directors of Kraft Heinz had approved the transaction, the likely… well, then the likelihood is that we would have invested 15 billion. But it would’ve required the approval of the independent directors as well.

Now Kraft Heinz, in going forward with making that offer, wanted to be sure that there would be enough equity capital, in addition to the debt that would be incurred, to make the deal. And so, informally, we had basically committed the 15 billion.

It only was approved on the basis that it be a friendly deal with Unilever. And initially, we thought they would be at least possibly interested in such a deal.

And when we found out otherwise, we withdrew the offer. So it would have been 15 billion of additional money, in all probability.

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