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Largest deal ever in the history of the U.S. food industry's

By Catholic Online (NEWS CONSORTIUM)
February 14th, 2013
Catholic Online (www.catholic.org)

It's being called the largest deal ever in the U.S. food industry's history. Warren Buffett's Berkshire is set to purchase 125-year-old ketchup-maker H.J. Heinz for $23 billion in a historic deal between the two business icons.

LOS ANGELES, CA (Catholic Online) - Heinz has confirmed that it agreed to be acquired by Buffett's Berkshire Hathaway and 3G Capital Management for $72.50 a share, or $23.3 billion. The deal is valued at $28 billion, debt included. The agreement was first announced on CNBC.

Berkshire and 3G will each put up $4.4 billion in equity for the deal, along with debt financing from JPMorgan Chase and Wells Fargo. In addition, Berkshire is also buying $8 billion of preferred stock that pays nine percent.

Buffett traditionally prefers to make his acquisitions outright. The deal is seen as highly unusual for Buffett as he is partnering with 3G, a Brazilian investment firm that owns a majority stake in Burger King. The billionaire investor told CNBC that he was approached with the idea for the deal in December, and thought it was "my kind of deal.

"This is my kind of deal and my kind of partner," he added. "Heinz is our kind of company with fantastic brands." Buffett added, "But I have a file on Heinz that goes back to 1980."

3G founder Jorge Paulo Lemann approached Buffett in mid-December about a possible deal, and both approached William Johnson, Heinz's chairman, president and CEO, soon after. The first offer was made last month.

3G will be the primary supervisor Heinz's operations after the deal closes, according to Buffet. Other 3G founders include Carlos Alberto Sicupira, Marcel Hermann Telles, Roberto Thompson Motta, and Alex Behring. "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," Johnson said in a statement.

Buffett also noted that the Heinz deal leaves Berkshire with enough money to bag another "elephant."

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