Berkshire Hathaway is controlled by Warren Buffett, who is chairman and chief executive of the company which owns a range of companies, including GEICO and NetJets, a substantial stake in Heinz, and has stakes in American Express, Procter & Gamble and IBM. The company is noted for outperforming the stock market under the leadership of Buffett, a value investor.
Billionaires Buffett and Jorge Paulo Lemann buy Heinz for US$23b
Bloomberg in New York
Warren Buffett and the Brazilian billionaire Jorge Paulo Lemann have agreed to buy the food company HJ Heinz for US$23 billion as they increased their bets on consumer products.
The buyers, Buffett's Berkshire Hathaway conglomerate and Lemann's buyout firm 3G Capital, will pay US$72.50 a share, a 20 per cent premium over Wednesday's closing price of US$60.48.
Berkshire would spend about US$12 billion to US$13 billion for the maker of soups, ketchup and baked beans, Buffett told CNBC.
"Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great-tasting products," he said.
The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about US$28 billion including debt, according to a statement.
Buffett has been seeking deals after the cash pile at Berkshire Hathaway climbed to more than US$45 billion. He has previously wagered on consumer products through equity investments in Coca-Cola, and he helped finance the confectionery firm Mars' purchase of the chewing gum maker Wrigley.
Lemann is worth about US$19 billion based on holdings in the brewing giant, Anheuser-Busch InBev, and Burger King Worldwide, according to the Bloomberg Billionaires Index.
Heinz said in November fiscal second-quarter sales in emerging markets rose 13 per cent, excluding the effects of foreign currency fluctuations and acquisitions or divestitures.
The company will retain its corporate headquarters in Pittsburgh, Pennsylvania, according to the statement.
Heinz traces its roots back to 1869, when Henry John Heinz and neighbour Clarence Noble began selling grated horseradish. The company introduced its famous tomato ketchup in 1876.
Centerview Partners and Bank of America acted as financial advisers to Heinz, while Davis Polk & Wardwell provided legal counsel.
Lazard served as lead financial adviser to the investment group. JPMorgan Chase and Wells Fargo also gave financial guidance, and the two banks have committed debt financing, according to the statement.