Berkshire, 3G buy ketchup maker Heinz in $34.6bn deal

Berkshire, 3G buy ketchup maker Heinz in $34.6bn deal
Alex Behring, Managing Partner at 3G Capital, talks as Heinz Chairman, President and CEO William R. Johnson listens during a news conference to announce that Heinz has agreed to be bought by Berkshire Hathaway and 3G Capital, in Pittsburgh.

WASHINGTON - Billionaire Warren Buffett's investment powerhouse Berkshire Hathaway and Brazilian-led 3G Capital announced Thursday they would take over venerable US ketchup maker Heinz in a deal worth US$28 billion (S$34.6 billion).

The buyers heralded 144-year-old HJ Heinz Co's strong, global portfolio of prepared food brands, which Buffett called "great tasting" products.

The two buyers will pay Heinz shareholders US$72.50 per share in cash - a 20 per cent premium on Heinz's Wednesday closing price.

Counting debt assumed by the buyers, the deal valued Heinz at about US$28 billion, the largest-ever food company takeover, they said.

Buffett, founder and chairman of Berkshire Hathaway, told CNBC the deal was the idea of 3G Capital's Brazilian founder, Jorge Paulo Lemann, and that the two would split the equity in Heinz 50-50, with 3G taking responsibility for management.

"Heinz is our kind of company with fantastic brands," he said. "It's my kind of deal and it's my kind of partner."

Heinz shares later soared to US$72.50 on the New York Stock Exchange, adding to a 17 per cent gain over the past 52 weeks.

Berkshire Hathaway's B shares gained 1.3 per cent, to $99.21.

"Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products," Buffett said in a statement announcing the deal.

"Their global success is a testament to the power of investing behind strong brand equities and the strength of their management team and processes."

Alex Behring, managing partner at 3G Capital, said his company was very excited about the Heinz name.

"It has incredible consumer perception around the world. It is really a powerhouse brand," he said in a press conference in Pittsburgh, Pennsylvania, the home base of Heinz.

With $11.6 billion in global sales last year, Heinz is one of the largest US food companies.

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