Buffett teamed up with 3G Capital in 2015 mega-deal to form Kraft Heinz

Buffett teamed up with 3G Capital in 2015 mega-deal to form Kraft Heinz

Millionaire businessman Warren Buffett has sought to play down murmurings of a rift with his fellow investor Jorge Paulo Lemann with whom he joined hands in 2015 to merge two US food companies to become what is today Kraft Heinz.

Buffett's investment holding company Berkshire Hathaway teamed up with Lemann, the co-founder of Brazil's 3G Capital, four years ago to amalgamate what was then H.J. Heinz and Kraft Foods into a global FMCG heavyweight. The deal that created Kraft Heinz was then valued at US$45bn.

But Buffett has since admitted they overpaid for what is now Kraft Heinz, with the admission coming after the company reported a huge $12.6bn fourth-quarter loss on the back of a $15.4bn write-down of assets in February and an investigation by the US Securities and Exchange Commission into purchasing and accounting practises. The company has since restated its earnings for the past three years.

In an interview with Becky Quick at news service CNBC today (25 June), Buffett said Lemann remains a "good friend", reportedly in response to reports on Wall Street of tensions between the two men. The news agency speculates any such rift could stem from the February debacle, although media reports suggested there was a strained relationship back in 2017 when Buffett made a hostile bid for fellow consumer goods giant Unilever. 

Buffett also pointed out in the interview that Lemann attended Berkshire Hathaway's annual meeting in Omaha last month and was also at an after-event private party, attended by the two of them and hosted by Berkshire board member Walter Scott. Buffett stated he also plans to see Lemann at the latter's 80th birthday party in August.

He also reiterated previous comments in the interview regarding the merger, but also made an observation over the debt levels at Kraft Heinz: "I made a mistake in the Kraft purchase in terms of paying too much," he said, adding that the write-down of the Kraft and Oscar Meyer brands was an acknowledgement of that. 

Kraft Heinz is now saddled with around $31bn in debt. The Berkshire Hathaway chief executive told CNBC "will take time to whittle that down".

The interview took place just days before FMCG veteran Miguel Patricio becomes CEO at Kraft Heinz on 1 July, replacing Bernardo Hees, who is leaving the Nasdaq-listed business to return to the private-equity arena with 3G Capital.