Buffett Looking to Take Coca-Cola (KO) Private

By Jun 18, 2014, 6:15 AM Author's Blog  

Wintergreen Advisers CEO David Winters spoke with FOX Business Network’s (FBN) Maria Bartiromo during Opening Bell with Maria Bartiromo about Berkshire Hathaway (BRK.A) Chairman and CEO Warren Buffett potentially working on a plan with 3G Capital to take Coca-Cola (KO) private saying, “where there is smoke there is fire and there is certainly a desire to do a big deal here.” Winters went on to say, “[Buffett] is looking for a big deal, he’s made a public statement, he’s praised 3G, he’s swimming in cash and he loves consumer product companies and loves Coke.” When asked whether he would like to see a change at the board, Winters said, “I think there is potentially opportunities of changes at the board” and that “there probably should be new board members and some fresh perspective here.”

On a potential privatization of Coca-Cola:

“Well basically you have this plan that was put in place that was excessive that was never justified that could be used as a down payment or a way to reduce costs. Then you have the potential for – Berkshire has huge amounts of cash. They want to put the money to work, they have a LBO candidate or partner that he has praised and it just makes sense that something is going on and they refuse to talk about anything.”

On whether there is more behind the Coca-Cola compensation plan and that Buffett is trying to take Coca-Cola private:

“Well it would make sense that there is something happening. Where there is smoke there is fire. There is potential for a lot of conflicts here because Buffett’s got his son on the board, he’s friendly with the directors and there is a conflict between 9 percent shareholders and everybody else, because everybody else wants full value.”

On whether he thinks Warren Buffett is trying to take Coca-Cola private:

“Well the plan on page 76 shows that when there is a change in control the plan vest. So where there is smoke there is fire and there is certainly a desire to do a big deal here. There were articles that came out in the Brazilin press and the U.S. press about a Coke 3G Berkshire Hathaway tie up and it all seems like something is going on here.”

On a possible behind the scenes deal with Coca-Cola and Berkshire Hathaway Chairman and CEO Warren Buffett:

“If you go back about a couple months they announced a plan that was later called an excessive plan that was never justified for why they needed it. Buffett went radio silent for four weeks…compensation plan which was never justified why, and then Buffett came out and said I’m opposed, but I love the management and then things sort of went quiet for a while… it just sort of seemed odd because there was a guy who always said I’m against excessive pay and he went along with it and then he dialed a couple month later, the company is very quiet and you go to the Berkshire annual meeting he announces – it’s already in the annual report that the Heinz model, the Heinz LBO model with 3G is the new model. And he announces at the annual meeting that he hasn’t bought Coke yet.”

On how he plans to get value out of this company:

“Well we are appealing to Coca-Cola board, in fact the letter today is to three of the chairs we think are most relevant, finance, governance, and so on…they basically need to be aware of their conflicts and their duty is to all shareholders, not to just one shareholder and now that Buffett has basically made his intentions known he is on the other side of the table.”

On whether there should be seats on the board replaced:

“I think there is potentially opportunities of changes at the board. There is certainly things that have come out over the last three months that are indicative that there probably should be new board members and some fresh perspective here. I think untimely the side of right will prevail.”

On whether there is any other reason Buffett is looking to take Coca-Cola private:

“He is looking for a big deal, he’s made a public statement, he’s praised 3G, he’s swimming in cash and he loves consumer product companies and loves Coke. And remember he has not done anything – he has friends on the board, he’s son is on the board. He did nothing to stop the plan.”

Video for viewing here.

Fox Business Network

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