Warren Buffett commanded the attention of retail and institutional investors alike with the release of his 50th annual letter to Berkshire Hathaway shareholders this weekend.
In his dispatch, the Oracle of Omaha expressed his fondness for partnering with 3G Capital, the private-equity firm that Berkshire teamed up with to purchase Heinz and provided funds to aid in Burger King Worldwide Inc.'s acquisition of Tim Hortons Inc.
"Whatever the structure, we feel good when working with Jorge Paulo [Lemann]," wrote Mr. Buffett, offering high praise for the co-founder of 3G.
In a note to clients, RBC Dominion Securities analyst David Palmer lists some consumer staples companies that Warren Buffett and 3G Capital might be kicking the tires on:
"One thing we can learn from Heinz is that the 'possible' deal is likely to be the next deal, thus narrowing the list within the world of food. Although we believe that Mondelez (Outperform) and Kellogg (Sector Perform) would be the best fit for 3G and Heinz (because those businesses give Heinz needed additional global scale in non-temperature control distribution), we see issues with an acquisition of either in the near term. We believe that Kraft (Outperform) and Mondelez represent the most acquirable companies from a board structure and ownership basis, and the urgency that these two companies are exhibiting with regard to cost cutting is perhaps the result of this. Conversely, we believe those companies that are ultimately less acquirable (e.g., Campbell (Sector Perform), Kellogg) are taking a less aggressive approach to cost reduction."
Mr. Buffett's Berkshire Hathaway held positions in Kraft Foods Group Inc. and Mondelez International Inc. at the end of 2014, then valued at nearly $12.1-million and $21-million, respectively. The other two firms highlighted by Mr. Palmer, Campbell Soup Company and Kellogg Company, have been the subject of Buffett-buyout rumours in the past.