Called It: How Kass Predicted Kraft Heinz's Interest in Campbell's

Finance Professor Predicted a Merger Months Ago

Jun 28, 2018
Finance

SMITH BRAIN TRUST  Bragging rights go to David KassThe clinical professor of finance at the University of Maryland’s Robert H. Smith School of Business was smiling a contented grin this week, amid reports that Kraft Heinz might be interested in acquiring Campbell’s Soup. The merger was one he predicted early this year in Smith Brain Trust’s first-ever M&A predictions list.

Kass made the prediction in January 2018. He noted at the time that Heinz had failed to acquire Unilever in 2017 and would likely go after another food company this year.

In acquiring the $13 billion soup maker, the company would look to reduce expenses while growing sales, thereby increasing profits, Kass noted. He observed this week that the tie-up would offer various synergies — among them, tomatoes. Both the soup maker and the ketchup maker use a lot of them.

Though neither company has confirmed the rumor, first reported in the New York Post, Campbell’s stock did heat up this week amid speculation.  

Kraft Heinz is 25 percent owned by Berkshire Hathaway and 25 percent owned by 3G Capital of Brazil. Berkshire Hathaway and its CEO Warren Buffett would be the financing partner of a deal to buy Campbell’s Soup, Kass predicted, and 3G Capital would be the operating partner. 

“Buffett has said he will only participate in friendly deals,” observed Kass, who has followed Buffett’s investments and philosophy for more than 35 years.

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About the Expert(s)

Dr. David Kass has published articles in corporate finance, industrial organization, and health economics. He currently teaches Advanced Financial Management and Business Finance, and is the Faculty Champion for the Sophomore Wall Street Fellows. Prior to joining the faculty of the Smith School in 2004, he held senior positions with the Federal Government (Federal Trade Commission, General Accounting Office, Department of Defense, and the Bureau of Economic Analysis). Kass has recently appeared on Bloomberg TV, CNBC, PBS Nightly Business Report, Maryland Public Television, Business News Network TV (Canada), American Public Media's Marketplace Radio, and WYPR Radio (Baltimore), and has been quoted on numerous occasions by the Washington Post, Bloomberg News and The Wall Street Journal, where he has primarily discussed Warren Buffett and Berkshire Hathaway.

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