Heinz Sold for $23 Billion
H.J. Heinz Co. agreed to be acquired by Warren Buffett's Berkshire Hathaway Inc. and private-equity firm 3G Capital for more than $23 billion.
Buffett, well known as a value investor, had indicated in recent months he was eager to do another deal. In Heinz, he will get a packaged-foods company known for its iconic ketchup brand but now battling weaker North American sales.
"It's our kind of company," Buffett said in an interview on CNBC, noting its signature ketchup has been around for more than a century. "I've sampled it many times."
Heinz shareholders will receive $72.50 in cash for each share. Including debt assumption, the deal, which has been unanimously approved by Heinz's board, is worth $28 billion.
Berkshire Hathaway and 3G Capital, the Brazilian global investment firm that took over Burger King, have pledged to maintain Pittsburgh as the Heinz global headquarters.
The deal, which is subject to approval by Heinz shareholders and regulatory approvals, will be financed through a combination of cash, rollover of existing debt, as well as debt financing. It is expected to close in the third quarter.
Heinz, best known for its iconic ketchup, also sells numerous other brands including Classico pasta sauce, Ore-Ida potatoes, and Smart Ones frozen meals.
"The Heinz brand is one of the most respected brands in the global food industry and this historic transaction provides tremendous value to Heinz shareholders," Heinz chief executive William Johnson said.
Berkshire, for its part, also owns Burlington Northern Santa Fe railroad, Geico insurance, Benjamin Moore, Fruit of the Loom Cos., Dairy Queen and a series of newspapers, among other brands.
Heinz came under fire from activist investor Nelson Peltz of Trian Fund Management LP in 2006. Peltz thought Heinz didn't have its costs under control and wasn't marketing its products well enough. Mr. Peltz waged an acrimonious proxy fight with Heinz and eventually earned a seat on the board.
Peltz congratulated Berkshire and 3G Thursday, saying "they're buying a great company." Peltz, speaking on CNBC, said the deal really came about because of "the amazing performance that Heinz's has demonstrated" over the last seven years, adding that Heinz has had 30-plus straight quarters of organic sales increases.
He said while he was proud to have played a "very, very small" part in the success of Heinz as a board member, "kudos" should go to Johnson, Heinz's CEO, his management team and to the board in total.
The transaction will be financed through a combination of cash provided by Berkshire Hathaway and affiliates of 3G Capital, rollover of existing debt, as well as debt financing that has been committed by J.P. Morgan Chase & Co. and Wells Fargo & Co.