Someone obviously likes a helping of baked beans with his cheeseburgers and cherry coke. Warren Buffett’s Berkshire Hathaway firm and US private equity outfit 3G have put in an offer to purchase the whole of Heinz for a cool £18bn.
It’s currently publicly owned and the deal means that shareholders will pocket $72.50 per share from the two buyout firms, which, according to the closing share price on Wednesday, would be a 20% premium. It would also be a 19% premium on the firm’s all-time high share price.
The firm’s chairman, president and CEO, William Johnson, said: ‘We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz. 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.’
Buffett just so happens to be one of the richest men in the world, and has spent decades seemingly making incredibly prescient investments. His portfolio building has been so successful that he has become known on Wall Street (and indeed everywhere in the financial world) as ‘the sage of Omaha’. He obviously feels there’s good money to be had from the world’s breakfast plates.
Heinz is a classic Buffett target company, but the price he's paying is a lot higher than we've come to expect from him. He told CNBC: ‘This is our kind of company. I’ve sampled it many times. Any time we see a deal is attractive and it’s our kind of business and we’ve got the money, I’m ready to go.’ Buffett might not have been the only one who was ready to go as suspicions of insider trading emerged on Friday. A stock market analysis firm, Trade Alert, said that 3,400 call option contracts changed hands in the hours running up to the deal announcement, which is four times the normal volume.
Heinz sells 650 million bottles of tomato ketchup every year, and is the biggest seller of baked beans in the UK. It also employs around 2,500 people in the UK, so it is a serious manufacturing player. But Buffett must have his eye on China and India, because sales in the UK and Europe are pretty much flat for the food giant. It’s only a matter of time before their increasingly western tastes turn to the Full English Breakfast…
It’s a bit old, but check out MT’s feature with Heinz UK Ireland president, Dave Woodward, for more background on the firm and its direction…
UPDATE: There has been a whiff of insider trading about the deal, as a New York analysis firm, Trade Alert,