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Warren Buffett part of group to buy Heinz in $23B deal

Published February 14, 2013 7:54 am

This is an archived article that was published on sltrib.com in 2013, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

NEW YORK • H.J. Heinz Co. has agreed to be acquired by an investment group including billionaire investor Warren Buffett in a deal valued at $23.3 billion.

The ketchup company says it's the largest deal ever in the food industry. Heinz shareholders will receive $72.50 in cash for each share of common stock they own. The transaction value includes the assumption of Heinz's debt. Based on Heinz's number of shares outstanding, the deal is worth $23.3 billion excluding debt.

"It's our kind of company," Buffett said in an interview on CNBC, noting its signature ketchup has been around for more than a century. "I've sampled it many times."

In addition to its ketchup, Heinz makes Classico spaghetti sauces, Ore-Ida potatoes and Smart Ones frozen meals. The company was founded by Henry John Heinz and his neighbor L. Clarence Noble in 1869. The pair's first product was grated horseradish, bottled in a clear glass to showcase its purity. The first ketchup was introduced in 1876; the company says it was the country's first commercial grade ketchup.

Last year, Heinz says it had sales of $11.6 billion, with ketchup and sauces accounting for just under half of that. Given the saturated North American market, the company has increasingly looked to emerging markets for growth. In 2013, emerging markets are expected to account for a quarter of the company's sales.

Berkshire Hathaway and 3G Capital, the investment firm which also bought Burger King in 2010, say Heinz will remain headquartered in Pittsburgh.

The per-share price for the deal represents a 20 percent premium to Heinz's closing price of $60.48 on Wednesday. Heinz said the deal was unanimously approved by its board. Buffett said on CNBC that Berkshire is putting $12 billion to $13 billion into the deal. But he noted that Berkshire will still have room to make more acquisitions, noting that its businesses continually replenish its cash supply.

"Anytime 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 said.

The deal is expected to close in the third quarter.

Shares of Heinz were up nearly 20 percent at $72.45.