Warren Buffett's Berkshire Hathaway isn't alone in struggling to make a big acquisition. Past partner 3G Capital is also coming up short
- Warren Buffett's Berkshire Hathaway isn't alone in struggling to make a major acquisition.
- 3G Capital, a Brazilian-US private-equity firm, has requested more time from its investors to strike a deal, the Financial Times reported on Friday.
- Berkshire and 3G have partnered several times in the past, most notably to buy Heinz in 2013 and merge it with Kraft in 2015.
- However, Buffett has acknowledged that Berkshire overpaid for Kraft, and its Kraft Heinz stake has plunged in value by more than two-thirds in the past few years.
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Warren Buffett's Berkshire Hathaway isn't the only company hunting for an elephant-sized acquisition and coming up empty-handed.
3G Capital, which has partnered with the famed investor's conglomerate several times in the past, has asked its investors for more time to deploy their money, the Financial Times reported on Friday.
The Brazilian-US private-equity firm doesn't want the pressure of closing a deal by a certain date or having to return cash to its backers, a person familiar with the talks told the newspaper. It has a $10 billion war chest and could make an acquisition worth up to $50 billion by leveraging its target's balance sheet, the Financial Times said.
The pandemic has caused widespread disruptions to businesses and clouded the economic outlook, while company valuations have soared to record levels, making it tricky to make big acquisitions at attractive prices.
Weathering a dry spell
3G, cofounded by Brazilian billionaire Jorge Paulo Lemann, has struck out repeatedly in recent years. For example, it tried to buy German industrial giant Thyssenkrupp's elevator division in February but lost out to a rival bid.
Kraft Heinz — the global food titan it created with Berkshire's help — also made a $143 billion offer for Unilever in 2017, but withdrew it after the Anglo-Dutch consumer-goods behemoth said it wasn't interested.
3G's past deals include acquiring Burger King and later adding Tim Hortons and Popeyes to a holding company called Restaurant Brands. Berkshire helped finance the Tim Hortons transaction, and also joined 3G to acquire Heinz in 2013 and merge the condiments titan with Kraft Foods in 2015.
That deal has been a disappointment. Buffett has admitted to overpaying for Kraft, and Berkshire's 26.6% stake in Kraft Heinz has plunged in value from about $30 billion in early 2017 to $9.8 billion at the end of the last quarter.
However, Buffett's fondness for Lemann and public comments about 3G suggest another tie-up could still be on the cards.
"Jorge Paulo is a good friend of mine," the investor said at Berkshire's annual shareholder meeting in 2019. "I think he's a marvelous human being."
"We love the idea of being their partner and I think there's a good chance that we will do more and perhaps even bigger things together," he said at his company's meeting in 2017.