Berkshire, 3G buy ketchup maker Heinz in $28bn deal

Billionaire Warren Buffett's investment powerhouse Berkshire Hathaway and Brazilian-led 3G Capital announced Thursday they would take over venerable US ketchup maker Heinz in a deal worth $28 billion.

The buyers heralded 144-year-old HJ Heinz Co's strong, global portfolio of prepared food brands, which Buffett called "great tasting" products.

The two buyers will pay Heinz shareholders $72.50 per share in cash -- a 20 percent premium on Heinz's Wednesday closing price.

Counting debt assumed by the buyers, the deal valued Heinz at about $28 billion, the largest-ever food company takeover, they said.

Buffett, founder and chairman of Berkshire Hathaway, told CNBC the deal was the idea of 3G Capital's Brazilian founder, Jorge Paulo Lemann, and that the two would split the equity in Heinz 50-50, with 3G taking responsibility for management.

"Heinz is our kind of company with fantastic brands," he said. "It's my kind of deal and it's my kind of partner."

Heinz shares later soared to $72.50 on the New York Stock Exchange, adding to a 17 percent gain over the past 52 weeks.

Berkshire Hathaway's B shares gained 1.3 percent, to $99.21.

"Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products," Buffett said in a statement announcing the deal.

"Their global success is a testament to the power of investing behind strong brand equities and the strength of their management team and processes."

Alex Behring, managing partner at 3G Capital, said his company was very excited about the Heinz name.

"It has incredible consumer perception around the world. It is really a powerhouse brand," he said in a press conference in Pittsburgh, Pennsylvania, the home base of Heinz.

With $11.6 billion in global sales last year, Heinz is one of the largest US food companies.

It owns top prepared food brands such as ABC sauces in Asia, Quero sauces in Latin America, Golden Circle in Australia, Ore-Ida frozen potatoes sold globally, Honig in the Netherlands, Plasmon baby food in Italy, and Smart Ones low-calorie frozen foods in North America.

But its main products are the iconic Heinz ketchup, sold globally through markets and fast-food vendors, and one of its earliest favorites in the United States, canned baked beans.

"With Heinz stock recently at an all-time high and 30 consecutive quarters of organic topline growth, Heinz is being acquired from a position of strength," Heinz chairman and chief executive William Johnson said, defending the deal.

Johnson and Behring stressed that they don't expect any major changes at Heinz, which they said will remain based in Pittsburgh.

"It is really about long-term value creation," said Behring.

"This company is being acquired from a position of strength," Johnson told reporters. "Our goal here is to make this a bigger, even more global company."

The deal is a big one for Berkshire Hathaway, Buffett's wildly successful investment fund.

Berkshire has been searching for lucrative ways to invest its $47 billion cash hoard in an environment of low interest rates and intense competition from other cash-rich investment funds for merger and acquisition opportunities.

3G Capital is coming off some of its own blockbuster deals. Its principals built and control the brewing titan Anheuser Busch InBev, now seeking to take over Mexico's Modelo.

And they also control Burger King, after a $4 billion takeover deal in 2010.

The deal is subject to approval by Heinz shareholders, and is expected to be completed in the third quarter of this year.

  • Popular hot yoga myths debunked 5 hours ago
    Popular hot yoga myths debunked

    What’s the hottest new workout taking the world by storm? That would be hot yoga, also known as Bikram yoga. Conducted in a heated room with sweltering temperatures of about 40°C (or approximately 104° Fahrenheit) and 40 per cent humidity, … Continue reading →

  • Thursday #sgroundup: Body found of boy who made first call from Korea ferry: report 6 hours ago
    Thursday #sgroundup: Body found of boy who made first call from Korea ferry: report

    Here are today’s top trending stories in case you missed them.

  • Look, don't touch: Flickr photo of the day 17 hours ago
    Look, don't touch: Flickr photo of the day

    If there's one car that's particularly sought-after among today's well-heeled car collectors, a Ferrari 250 would be it. Usually it's the GTO variant, like the 1963 that sold for a record $52 million last year. A 250 of any sorts demands unfathomable cash, however, which is why we can but gawk at this 250 Testa Rossa. It's as close as any mere mortal will ever come to owning one.

  • Photo of a very thin Lee Kuan Yew sparks concern
    Photo of a very thin Lee Kuan Yew sparks concern

    A new picture of Singapore's first prime minister, Lee Kuan Yew, who is now 90 years old, has drawn concern from people on Singapore's internet space.

  • Waste oil collector struggles after STOMP posts, receives help from kind souls
    Waste oil collector struggles after STOMP posts, receives help from kind souls

    After being photographed at work in Jurong pooling used oil near coffee shops, 50-year-old Valerie Sim has been struggling to keep her family afloat. Web portals STOMP and The Real Singapore published pictures of her in February, triggering a witch hunt for others like her and comments from readers like “Who knows if they’ll use it as cooking oil?” Some readers also said they filed police reports against her and other people they believed were doing the same thing she was.

  • Indonesian general says his flashy watch is a fake
    Indonesian general says his flashy watch is a fake

    JAKARTA, Indonesia (AP) — Indonesia's military commander said critics who called him out for wearing an especially luxurious watch should be quiet because the timepiece is actually a cheap Chinese fake.