No. of Recommendations: 7
Analysts are reacting to the disclosure by Kraft Heinz Company (NASDAQ:KHC) late on Tuesday that it is evaluating strategic transactions to unlock shareholder value and that Berkshire Hathaway (BRK.A) (BRK.B) will no longer hold board seats at the food giant.
Bank of America analyst Peter Galbo noted that while no longer having board representation, Berkshire Hathaway (BRK.A) (BRK.B) will still hold a stake of about 27.5% in Kraft Heinz (NASDAQ:KHC). "While we have no knowledge of Berkshire’s intentions, moving on from the board could signal potential share sales of its KHC’s investment, in our view," warned Galbo.
Meanwhile, Wells Fargo analyst Chris Carey highlighted that ~1/3 of Kraft Heinz's (KHC) portfolio could be up for review. He reminded investors that the company has been re-positioning buckets of its portfolio recently, isolating less core assets. He noted that KHC appears to have already sought strategic alternatives for "Balance" assets, with a deal for Oscar Mayer reportedly being sought. "A restructured board could also be more aligned on a potential sale of assets, in our view," stated Carey.
Morgan Stanley analyst Megan Alexander Clapp said that while an evaluation of strategic transactions is not necessarily anything new, the formal press release could convey a sense of urgency. The alternative is that the company may have wanted to cushion the news regarding the board changes. "It's certainly possible the timing is merely a coincidence, though we think it’s likely the sequence of events could cause some investor concern about the long-term intentions of its largest shareholder under new leadership," wrote Clapp.
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