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Motley Fool Money

Buffett’s Buy & Soda’s Steady Decline

Motley Fool Money

The Motley Fool

Business, Investing

4.43K Ratings

🗓️ 27 March 2015

⏱️ 39 minutes

🧾️ Download transcript

Summary

Warren Buffett and 3G Capital team up again for the merger of Heinz and Kraft Foods. Coke and Pepsi grapple with the same problem: diet soda sales falling year over year. Wall Street’s most powerful woman takes a job with Google. And McDonald’s rolls out a surprising new product line. Our analysts discuss those stories and more, plus CPA Megan Brinfield offers tax tips for investors.

Transcript

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0:00.0

Everybody needs money. That's why they call it money.

0:07.0

From full global headquarters, this is Motley Cool Money.

0:19.0

It's the Motley Cool Money radio show. I'm Chris Hill joining me in studio this week for

0:23.0

Million Dollar Portfolio. Jason Moser, Matt Argusinger and Simon Erickson.

0:27.0

Thanks for being here, guys. Let's try it back to the empty.

0:30.0

Let's get this show over with so you can get back to actually running the Million Dollar Portfolio service.

0:35.0

We've got big news in the beverage industry, big stock buyback plans, and a potential game changer for the biggest burger chain in the world.

0:42.0

As always, we'll give you an inside look at the stocks on our radar.

0:46.0

But we begin with the deal of the week. Craft foods is merging with hines.

0:52.0

Craft share holders get 49% stake, plus some special cash dividends. Hines gets 51% of the company, Matt.

0:59.0

It's now the third largest food company in America. What did you think of this deal?

1:04.0

Well, this is warm buff. It's sort of new MO. He's always wanted to bag elephants.

1:09.0

In this case, he's getting a big piece of an elephant. And it's the new model of him going after beer companies and using 3G Capital,

1:17.0

or a Pololemon who he has great relationship with. They partnered on hines. He likes their management style.

1:22.0

He likes the way they cut costs. And so this is a way for buffers to go after companies where he doesn't necessarily like the management.

1:28.0

But he knows he's got the 3G guys in, bring them in, partner with them, and he gets the management and the stake in the business.

1:34.0

It's a huge deal. It kind of fits right into the MO right now.

1:38.0

And we've talked before the show. It kind of begs the question, what other food companies could be in play?

1:44.0

And companies like McCormick, Campbell Soup, Kellogg, General Mills. I mean, these are some substantial elephants out there that maybe 3G and Buffett are going to go after.

1:53.0

Yeah, Jason, to Matt's point, you look over the last couple of years. This is just the latest piece of a growing puzzle of mergers in the food industry when you consider Kellogg and Pringles,

2:04.0

Hormel and Skippy's General Mills and Annie's.

2:07.0

Yeah, I think this is an industry where scale is becoming more and more crucial as time goes on. I think there's a relatively complimentary brands that come together and they'll be able to ring out the cost efficiencies there.

...

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