Takeover Talk
Many food-industry executives are already feeling the heat. Last year, Mondelez’s pursuit of Hershey was partly seen as a defensive move to bulk up and stave off a takeover. Hershey resisted and a deal never happened.
RBC’s Palmer says Mondelez, which generates more than 70 percent of its revenue outside of North America, is the most likely target for Kraft Heinz. Kraft and Mondelez split in 2012, but now the company would give 3G an international presence and plenty of room to improve margins.
A possible takeover of Mondelez, which has a market value of almost $70 billion, has even attracted the likes of hedge-fund manager Bill Ackman, who took a large stake in the company in 2015.
Other analysts have focused on General Mills, Kellogg and Campbell, which would give Kraft Heinz a stronger U.S. presence in categories like snack chips, soup and cereal, and make it easier for 3G to cut costs. Bernstein’s Alexia Howard says Kraft Heinz will buy General Mills later this year.
(3G declined to comment, as did Kraft Heinz, General Mills, Kellogg and Campbell. Buffett didn’t respond to requests for comment.)
Wild Card
One potential wild card is Donald Trump. The new U.S. president has vowed to protect American jobs and has aggressively gone after companies that have moved them overseas. Big job cuts -- a hallmark of every 3G takeover -- could draw Trump’s ire, says Ken Shea, an analyst at Bloomberg Intelligence.
“They may have a tougher time politically laying off thousands of people,” Shea said.
That hasn’t kept some investors from talking about what would be the most audacious deal of them all: a Buffett-backed takeover of Coke.