September 17, 2019 / 3:32 PM / a year ago

Kraft Heinz slips as 3G Capital cuts stake

FILE PHOTO: Shareholders shop for discounted products at the Kraft Heinz booth at the annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska, U.S., May 4, 2019. REUTERS/Scott Morgan

(Reuters) - Shares of Kraft Heinz Co (KHC.O) fell 4% on Tuesday after the packaged food maker’s second largest investor, 3G Capital, sold over 25 million shares in the open market at a discount.

In a filing with the U.S. Securities and Exchange Commission on Monday, 3G Global Food Holdings disclosed that it sold 25.1 million shares at $28.44 per share, lower than Kraft Heinz’s Monday’s close of $29.62.

The $712.95 million stock sale brings 3G Capital’s stake down to 20.1% from 22.14%, and it continues to be the second largest shareholder behind Warren Buffett’s Berkshire Hathaway Inc (BRKa.N).

“The sale was driven by periodic liquidity windows by 3G investors in the 3G fund that holds Kraft Heinz stock,” said Kraft’s spokesman, adding that the Brazilian private equity firm has no current plan or intention to sell any additional shares.

Separately, Jorge Paulo Lemann, 3G capital co-founder and Kraft Heinz board member, disclosed his purchase of about 3.5 million of the company shares for about $100 million. (here)

3G Capital’s stake cut comes as Kraft Heinz struggles to turnaround following dismal results, a string of write-downs of brands amidst competition from private-label brands, changing consumer tastes and lower investment in its brands due to heavy cost-cutting.

The company in August had reported weak first-half sales while it wrote down values of its several business units by more than $1 billion and withdrew its full-year outlook.

“We don’t think it sends an encouraging signal to the market that 3G Capital – the controlling shareholder – is reducing its holdings at this particular point in time,” said Guggenheim analyst Laurent Grandet.

Shares of Kraft Heinz have slumped about 31% this year.

Reporting by Soundarya J in Bengaluru; Editing by Shailesh Kuber

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