Private Equity Firm 3G Buys Heinz With Buffett

Feb 15 2013 | 3:02am ET

Warren Buffett has not had kind words for private equity firms in the past, but that did not stop him from joining forces with one to buy H.J. Heinz.

Buffett's Berkshire Hathaway is buying the iconic condiment-maker for $23.2 billion in a leveraged buyout with New York-based 3G Capital. Both sides will own half of the company, but Berkshire will put up more cash—$12 billion to 3G's $4 billion—even though 3G will actually manage the company. Berkshire will get preferred shares that will pay a 9% dividend.

"Heinz will be 3G's baby," Buffett said on CNBC.

Indeed, 3G was the driving force behind the deal, although Buffett said he has been eyeing Heinz for more than 30 years. 3G founder Jorge Lemann approach Buffett about taking Heinz private in December, and Lemann met with Heinz CEO William Johnson later in the month. Work on the deal really got under way just two weeks ago.

Buffett said Berkshire may also serve as the exit strategy for the private equity firm, which bought Burger King two years ago. "We may increase our ownership if any members of the 3G group ultimately want to sell out later," Buffett told The New York Times, saying he had no intention of ever selling Heinz.

Berkshire and 3G's offer is a 19% premium to Heinz's previous all-time high share price. Buffett has said he will not raise the bid. Banks will finance debt to pay for the rest of the deal.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note