Buffett's Soda Empire: If Kraft Heinz Acquired Pepsi, What Share Of The Soda Market Would 'The Oracle' Own?

After he oversaw the highly-publicized mega merger that created Kraft Heinz Foods Co (NYSE: KHC) in 2015, Warren Buffett may not be finished with his food shopping just yet.

In a new note, Bernstein analyst Ali Dibadj speculates that Kraft Heinz could target PepsiCo, Inc. (NYSE: PEP). Dibadj believes traders should add Pepsi to the speculative list of potential Kraft Heinz buyout targets, which includes Mondelez International Inc (NASDAQ: MDLZ), General Mills, Inc. (NYSE: GIS) and Kellogg Company (NYSE: K).

“KHC could target PEP’s entire business (split roughly 50/50 between Snacks/Beverages), realizing meaningful EPS accretion of ~30 percent,” Dibadj explained. He noted that only about 1.5 percent of Pepsi’s global business overlaps with Kraft Heinz’s, suggesting little grounds for antitrust concerns.

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Assuming Kraft Heinz were to fully acquire Pepsi at some point down the line, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-B) would own quite the soda empire.

According to Statista, The Coca-Cola Co (NYSE: KO) represents 48.6 percent of the global carbonated beverage market, while PepsiCo represents 20.6 of the market. If Kraft buys Pepsi, Berkshire’s stake in the soda business would be formidable but far from a majority interest.

Berkshire currently holds a 9.2 percent stake in Coca-Cola and only a 26.7 percent stake in Kraft Heinz. After crunching the numbers, a Pepsi buyout would still only give Berkshire ownership of about 10 percent of the total global soda market.

Bernstein maintains Outperform ratings on Coca-Cola, PepsiCo and Kraft Heinz.

Image Credit: By USA International Trade Administration (https://www.youtube.com/watch?v=GLKDFhCjaY4) [Public domain], via Wikimedia Commons

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