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Edward Jones Analyst On Kraft-Heinz Merger: 'A Cost Savings Story'

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Edward Jones Analyst On Kraft-Heinz Merger: 'A Cost Savings Story'

Speaking to Benzinga, Edward Jones Analyst Brian Yarbrough discussed the Kraft Foods Group Inc (NASDAQ: KRFT) merger with H. J. Heinz Company.

Yarbrough felt that a food industry merger was expected following the acquisition of H. J. Heinz Company by Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) and 3G Capital.

Yarbrough "was a little surprised that it was Kraft Foods" because, unlike Heinz, Kraft did not have an international platform or exposure to emerging markets.

Related Link: What Wall Street Thinks Of The Kraft Heinz Merger

Discussing the future of the new company, Yarbrough said "3G's track record is not all that stellar on growing revenues, it's more about a cost savings story."

The analyst expected that costs savings from synergies would be what drives earnings growth over the coming years, rather than revenue growth.

Yarbrough compared the situation to the acquisition of Anheuser-Busch by Inbev, now Anheuser Busch Inbev SA (ADR) (NYSE: BUD), which was unable to grow volumes in the U.S., however, "the earnings profile has ramped up substantially."

Yarbrough felt that many in management would lose their positions as had already been seen at Anheuser-Busch, Heinz, Burger King and Tim Hortons.

Shares of Kraft soared Wednesday and recently traded at $82.03, up 33.77 percent.

Kevin Riley and Brianna Valleskey contributed to this report.

Posted-In: Anheuser-Busch Brian Yarbrough Burger King Edward Jones heinz Tim HortonsAnalyst Color Exclusives Best of Benzinga

 

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