Kraft Heinz shares plunged nearly 25 percent Friday after the food giant disclosed an investigation by federal regulators. It also said it will slash the value of its Kraft and Oscar Mayer brands by $15.4 billion.
The company disclosed the investigation and the write-down in its fourth-quarter earnings report, which it issued late Thursday. Kraft Heinz also said it lost $12.6 billion in the quarter.
Friday’s stock price plunge, to less than $36 a share moments after the market opened, represents a $3.2 billion hit alone for the company’s largest investor, Warren Buffett’s Berkshire Hathaway, which owns more than 26 percent of the outstanding shares in Kraft Heinz. The food company’s total stock market value loss exceeded $12 billion Friday morning.
Kraft Heinz divulged the receipt of a subpoena in October from the U.S. Securities and Exchange Commission related to its procurement operations. Those operations handle interactions with outside suppliers.
The company’s CFO, David Knopf, said during a conference call with analysts Thursday that the company conducted “a very thorough internal investigation” after it learned about the SEC scrutiny.
“We determined that we should have recorded $25 million in prior periods, which we booked in” the fourth quarter,” Knopf said. “And to put into context, that compares to our overall procurement spend of over $11 billion, which excludes big four commodities spend.”
Knopf said the company’s $15.4 billion write-down was related to the declining values of its food brands in three divisions: Kraft natural cheese, Oscar Mayer cold cuts, and its Canada retail business.
–With reporting by the Associated Press.