Buffett: 'Absolutely No Chance' Berkshire Will Take Coke Private

Wednesday, 18 Jun 2014 07:48 AM

By Dan Weil

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Warren Buffett has pointedly denied an accusation from activist investor David Winters that Buffett's Berkshire Hathaway might have plans to take Coca-Cola private.

Winters, CEO of Wintergreen Advisers, sent a letter to Coke's board saying he's concerned that Berkshire and private equity firm 3G are plotting a "sweetheart" deal that would enrich Buffett and his friends in Coke management at the expense of regular shareholders.

Berkshire is the largest shareholder in Coke, with a stake of more than 9 percent. Berkshire joined forces with 3G to buy Heinz Co. last year.

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So what does Buffett think of Winters' accusation? "There's absolutely no chance of that," he tells CNBC.

In April, Winters criticized Buffett for not taking a stronger stand against Coke's stock compensation plan.

Buffett abstained in a vote on Coca-Cola's equity compensation plan in April, because the plan is "excessive," he explained at the time.

As for Coke's financial strength, Morningstar analyst Adam Fleck offers a positive assessment.

"We believe Coca-Cola's brand-driven intangible assets and strong cost advantages as the largest beverage company in the world support its wide economic moat and long-term growth trajectory," he writes on Morningstar.com.

"While declining consumption of carbonated beverages in North America is a near-term headwind for Coke, we believe international markets will provide plenty of growth opportunities in the long term, given lower per capita consumption levels. In addition, Coke's dominant market position in many regions should support continued strong pricing actions."

Fleck puts Coke's fair value at $44 a share. Shares rose 26 cents to close at $40.92 Tuesday in NYSE trading.

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