Heinz take-over signals new global approach

Posted by AFN Staff Writers on 18th February 2013

HJ Heinz Company has announced that it will be acquired by an investment consortium Berkshire Hathaway and Brazillian-based 3G Capital for US $28 billion, the largest acquisition in food history.

Billionaire Warren Buffet’s Berkshire Hathaway investments include property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing and retail services, and now – Heinz.

Mr Buffet and 3G Capital owner Jeorge Lemann will split the Heinz deal evenly, deciding to take-over the global food giant due to its “steady growth, barely hurt during the recession.”

Australian Repercussions

Heinz achieved US $11.6 billion in global sales last year and is one of the largest food processing companies around the world, including Australia. HJ Heinz Company Australia, owned by the HJ Heinz Company US division, will be included in the take-over.

The Heinz take-over has sparked speculation over whether Heinz’s Australian brands will continue to be processed in Australia. In mid 2011, Heinz moved its Golden Circle beetroot processing facility from Australia to New Zealand in which 340 jobs were lost.

HJ Heinz in Australia sells Australia’s leading range of tomato sauces and ketchups, as well as tinned meals such as baked beans and spaghetti, soups, sauces and dressings, frozen vegetables and meals, desserts and wet and dry baby food – all under the Heinz brand.

Other well-known Australian Heinz-owned brands include: Wattie’s tinned spaghetti and beans; Greenseas tuna; Golden Circle juice, tinned fruit and beverages; Original Juice Co fruit juices; Cottee’s cordial; Rose’s conserves and marmalade; and the Weight Watchers portion-controlled meals range.

 “Exciting new chapter for Heinz”  

Under the terms of the agreement, which has been unanimously approved by Heinz’s Board of Directors, Heinz shareholders will receive $72.50 in cash for each share of common stock they own, in a transaction valued at US $28 billion, including the assumption of Heinz’s outstanding debt.

Heinz Chairman, President and CEO William R. Johnson said that the takeover was “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,” Mr Johnson said.

“As a private enterprise, Heinz will have an opportunity to drive further growth and advance our commitment to providing consumers across the globe with great tasting, nutritious and wholesome products,” Mr Johnson added.

The transaction will be financed through a combination of cash provided by Berkshire Hathaway and affiliates of 3G Capital, rollover of existing debt, as well as debt financing that has been committed by J.P. Morgan and Wells Fargo.

The Berkshire Hathaway and 3G Capital take-over is expected to be finalised by the third quarter of 2013.

Heinz is to be acquired by Berkshire Hathaway and 3G Capital.