HGT Law Commences Derivative Lawsuit Against 3G Capital And Directors And Officers Of The Kraft Heinz Company

On October 29, 2019 HGT Law filed a shareholder derivative lawsuit (“Lawsuit”) on behalf of the shareholders of The Kraft Heinz Company (“Kraft Heinz” or the “Company”) against 3G Capital Inc. and its affiliates (“3G Capital”), and various Kraft Heinz directors and officers, for breaches of fiduciary duty arising from insider trading and the issue of misleading statements about the financial condition of the Company.

The Lawsuit alleges that on August 7, 2018, 3G Capital, one of the largest beneficial owners of Kraft Heinz common stock and a Company insider, sold over 20 million shares of the Company’s stock at a favorable time while in the possession of material, negative information related to Kraft Heinz’s reporting units and trademarks.  This material information had not been shared with the Company’s stockholders.  Within months of 3G Capital’s stock sale, the negative information concerning the reporting units and trademarks began to be revealed.  On November 2, 2018, Kraft Heinz disclosed a $215 million impairment to its Smart Ones trademark, which resulted in the Company’s stock price falling nearly 10% and closing at $50.73 per share.  On February 21, 2019, Kraft Heinz revealed the full scope of the negative trends affecting its business and announced a $15.4 billion impairment charge related to certain goodwill and trademarks.  As a result, the price of Kraft Heinz common stock fell $13.23 per share, or almost 28%, from $48.18 per share on February 21, 2019 to $34.95 per share on February 22, 2019.  By selling at $59.85 per share back on August 7, 2018, 3G Capital avoided losses amounting to hundreds of millions of dollars.

On March 1, 2019, the SEC issued a subpoena to Kraft Heinz related to the Company’s assessment of goodwill and intangible asset impairments and related matters. 

In the Lawsuit, Plaintiff seeks to recover for the harm sustained by the Company as a result of the breaches of fiduciary duty by 3G Capital, and the Company’s directors and officers.  Plaintiff also seeks a return of the illicit insider trading profits made through the use of confidential Company information.

A copy of the complaint filed by HGT Law on behalf of Kraft Heinz’s shareholders can be found here.

For more information about the Kraft Heinz lawsuit or any of our other cases, please contact us at (646) 453-7288 or via email at info@hgtlaw.com.