Warren Buffet is all set to acquire food giant Heinz in collaboration with 3G Capital’s Jorge Paulo Lemann for $28bn (£18bn), touted to be food industry’s largest ever acquisition. The world’s third richest man will invest between $12bn (£7.7bn) and $13bn (£8.3bn) in cash as part of the purchase, while Jorge Lemann, who is Brazil’s second-richest man, and loans from US banks JP Morgan and Wells Fargo will make up the rest of the investment. Warren Buffet’s investment firm Berkshire Hathaway and 3G, which will have operational control of Heinz, and would be equal equity partners.
Berkshire Hathaway and 3G Capital are set to pay stockholders $72.50 (£46.72) per share, a 19% premium on $72.80 (£46.90) on Heinz’s all-time high share price, bringing the deal’s value to $28bn (£18bn) including debt assumption. Heinz confirmed that the deal would be financed with cash from Berkshire and 3G, debt rollover and debt financing from JP Morgan and Wells Fargo. Berkshire Hathaway and 3G Capital said in a statement that Heinz will remain headquartered in Pittsburgh, in order to “continue its philanthropic support of community initiatives and related investments”.
“It’s our kind of company. It’s got a group of fantastic brands led by ketchup. The ketchup brand has been around for 135 years or so and I’ve sampled it many, many times”, said Warren Buffet, who has previously bet on US housing market recovery. While William R. Johnson, the chairman, president and chief executive of Heinz is happy with the deal as he stands to gain as much as $100m (£64.4m) from the buyout, if some reports are to be believed.
Heinz, a US food processing company famous for its 57 varieties of ketchup, has been the subject of much takeover speculation and when asked why the company had accepted this deal, William R. Johnson said the offer was just so good he felt “compelled” to take it to the board and noted that it was the largest deal in the food industry’s history. However, it has not been made clear whether William R. Johnson would stay aboard on this to-be giant food company. It may be noted that the Heinz deal comes just days after shares in in the food company hit an all-time high of $61 (£39.3), receiving unanimous approval from the company’s board.