Heinz Ketchup Acquired by Brazil's 3G Capital, Buffet's Berkshire Hathaway BRK for $28 billion, 20% premium (foreign takeovers)
- Last Updated on Sunday, 07 April 2013 06:38
- Written by Seraphim
Brazil's 3G Capital (Paulo Lemann) and Omaha's Berkshire Hathaway (Warren Buffet) announced on February 14, 2013 that they will be taking control of the world's largest ketchup producer, H.J. Heinz Company, in a deal valued at $23.2 billion ($28 billion including debt) or 19% higher than the stock price. The deal is significant: Heinz has a 26% share of the global ketchup market, 59% in the United States;
Valued at $28 billion the deal is the largest ever in the history of takeovers involving private labels. The pricetag, which includes the assumption of $4.1 billion in long term debt, amounts to $72.50 a share. Just days after the announcement, SEC regulators accused Zurich based traders of insider trading. In response they froze a swiss bank account belonging to the group.
Financials - Heinz's European operations generate more revenue than its American counterpart, however the US business is more profitable. Heinz profits about $1 billion of the $12 billion it rakes in annually in sales. Wal-Mart, Safeway, Albertson's are the leading distributors of Heinz products.
Products - Canned goods such as beans in tomato sauce and spaghetti. Ketchup, mustard, vinegar, bbq sauces, pasta sauces, tomato juice.
Though 3G Capital (equity firm) and Berkshire Hathaway will each own 50% of Heinz, control of the company will go to Brazilian equity firm 3G Capital. Heinz produces at factories/plants in ten states.
Heinz ketchup business has a global reach with a presence in more than 200 countries. The company is named after its founder H.J. Heinz who organized the business back in 1888. H.J. Heinz is grandfather to Republican senator H.J. Heinz II who was the former spouse of John Kerry's current wife, Theresa Heinz. Teresa Heinz Kerry's personal forturne is estimated at about $1.2 billion (10X that of John Kerry), much of which was inherited from her former husband. Heinz incorporated in 1905.