LONDON, Feb 27 (Reuters) - U.S. food company Kraft Heinz is not targeting any other large deals for now after being snubbed by Unilever because valuations in the sector are too high, major shareholder Warren Buffett told CNBC news on Monday.
“There isn’t any back-up deal. That was the only one that certainly I seriously thought about that made sense,” the billionaire investor told the cable television network.
“Will there be another deal at Kraft Heinz someday? My guess is yes, but who knows when ... it would have to be friendly and frankly, the prices in that field make it very, very, very tough to make an intelligent deal,” Buffett said in a wide-ranging interview at a gathering in his hometown of Omaha, Nebraska.
Buffett, chairman and chief executive of Berkshire Hathaway , and private equity firm 3G Capital together own 50.9 percent of Kraft. They built the company into the world’s fifth-largest food and drinks firm through acquisitions and a relentless drive to boost profits through aggressive cost cuts.
But with sales stagnating and margins flattening, analysts and investors have been expecting another major deal to reignite growth, though its choice of Anglo-Dutch consumer goods firm Unilever came as a surprise.
Kraft Heinz withdrew its offer for Unilever on Feb. 19, two days after it disclosed the proposal following reports about an approach for the maker of Dove soap and Ben & Jerry’s ice cream.
“When I was called by a representative of Unilever on Saturday, I said ‘if this is regarded as hostile or unfriendly, you don’t have to worry about it, there isn’t any offer’,” he said, stressing that Kraft never intended to go hostile.
He said Alex Behring, managing partner of 3G Capital and Kraft chairman, met Unilever Chief Executive Paul Polman in London on two occasions and presented a letter outlining a plan to create a global consumer goods giant at the end of the second visit after interpreting Polman’s initial response as “neutral”.
“Alex took it as a maybe and gave this letter outlining a deal to Unilever,” Buffett said in the interview, noting that once he, Behring and 3G’s co-founder Jorge Paulo Lemann understood Unilever was against a deal, they dropped it.
“Once the three of us learned that it was regarded as unfriendly, we had no intention of making one and I think the Unilever people understand that now,” Buffett said. (Reporting by Martinne Geller in London and Sam Forgione in New York; editing by David Clarke)