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Digging into Kraft Heinz's M&A upside

Dec. 21, 2016 1:17 PM ETThe Kraft Heinz Company (KHC) StockMDLZ, KHCBy: Clark Schultz, SA News Editor10 Comments
  • Kraft Heinz (NASDAQ:KHC) has enough financial muscle to fund a new $90B deal, according Susquehanna.
  • Analyst Pablo Zuanic reiterates that Mondelez International (NASDAQ:MDLZ) is the most logical target for KHC. Mondelez trades with a market cap just under $69B.
  • Asset divestitures could bring down the amount of money that Warren Buffett and 3G would have to kick in to retain a controlling stake in KHC, while debt and equity issuance would fund the balance.
  • Susquehanna PT math: "Our price target is now $115. A hypothetical bid for, say, MDLZ (28% accretive as per our math, with a $90B deal funded half equity and half cash) would add about $28 to our just-on-fundamentals valuation of $100, bringing the stock to $128. Our published price target of $115 takes half of the accretion from this hypothetical deal (i.e., assigning 50% probability)."

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