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

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of