# Buffett buys H.J.Heinz for 23.3 billion



## muleman RIP

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                    Tags:           Warren Buffett              |               Berkshire Hathaway              |               Heinz              |               buy 

*     Warren Buffett’s Berkshire Hathaway, 3G Capital Buying Heinz for $23.3 Billion*



                                              Thursday, 14 Feb 2013 08:00 AM




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 	                            Billionaire investor Warren Buffett is dipping into the ketchup  business as part of $23.3 billion deal to buy the Heinz ketchup company.

H.J. Heinz Co. says it's the largest deal ever in the food industry. The  company, based in Pittsburgh, also makes Classico spaghetti sauces,  Ore-Ida potatoes and Smart Ones frozen meals. Including debt assumption,  Heinz valued the transaction at $28 billion.

Buffett's Berkshire Hathaway and its partner on the deal — 3G Capital,  the investment firm that bought Burger King in 2010 — say Heinz will  remain headquartered in Pittsburgh. Heinz CEO William Johnson said in a  statement that the company "will have an opportunity to drive further  growth" as a private enterprise.

"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."

The company was founded by Henry John Heinz and his neighbor L. Clarence  Noble in 1869. Their 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 overseas for  growth. In 2010, for example, the company bought Foodstar, which makes  Master brand soy sauce and fermented bean curd in China. Heinz expects  emerging markets to account for a quarter of the company's sales.

Representatives for Heinz and the investment group weren't able to  immediately provide any further details on the deal, including whether  there would be any management changes or layoffs.

Buffett did not immediately respond to a message from The Associated  Press on Thursday. But he has recently said that he's been hunting for  elephant-sized deals and at the end of September he had $47.8 billion  cash on hand to finance any investments.

Heinz has the type of brand equity that takes years to create and it has  been able to raise prices even in the highly competitive grocery  business, said Brian Sozzi, chief equities analyst for NBG Productions.

"There isn't going to be another Heinz brand," he said. "It has a durable competitive advantage."

Generally, Buffett prefers to buy entire companies for his Berkshire  Hathaway conglomerate and then allow the businesses to continue  operating much the way they were before. Berkshire has also helped  finance deals before — most recently during the financial crisis of  2008, when he made lucrative deals for Berkshire when few other  companies had cash.

Berkshire's biggest acquisition ever was its $26.3 billion purchase of  BNSF railroad in 2010. Before that, it was the $16 billion stock  purchase of reinsurance giant General Re in 1998.

Heinz shareholders will receive $72.50 in cash for each share of common  stock they own. Based on Heinz's number of shares outstanding, the deal  is worth $23.3 billion excluding debt. Including debt assumption, Heinz  valued the transaction at $28 billion.

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 because 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.


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## FrancSevin

Is anyone concerned that Berkshire is getting too big?

I mean think of the evil represented by Bain Capital and companies like that. Why is Warren Buffet's aquisition activities good, but Mitt Romney's was somehow evil?


Just askin'


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## waybomb

Being in food, why would he want to get into food? Is something else under the Heinz umbrella? Payoff for Kerry? My head is spinnin here.


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## grizzer

FrancSevin said:


> Is anyone concerned that Berkshire is getting too big?
> 
> I mean think of the evil represented by Bain Capital and companies like that. Why is Warren Buffet's aquisition activities good, but Mitt Romney's was somehow evil?
> 
> 
> Just askin'



Bain levered up and gutted the companies.

Buffet actually manages and grows the business


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## FrancSevin

grizzer said:


> Bain levered up and gutted the companies.
> 
> Buffet actually manages and grows the business


 
An opinion not supported by facts.

Bain Capital grew companies.  Just as Berkshire has done.
Sometimes that means closing down bad operations.  Just as Berkshire has done.

There is no essential difference in the way both operated.  Except tha one is a friend of the GOP and one isn't.


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## Melensdad

Buffett owning Heinz is just a good reason to switch to RED GOLD brand ketchup!


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## FrancSevin

Melensdad said:


> Buffett owning Heinz is just a good reason to switch to RED GOLD brand ketchup!


I buy W Ketchup online. Best ever.

http://www.wketchup.com/

W KetchupAbout W Ketchup™ Place an Order News Press Comments FAQ Contact Us 




One Flavor:
American 

W Ketchup™ is made in America, from ingredients grown in the USA. 





 A portion of every sale is donated to the Freedom Alliance Scholarship Fund, which provides scholarships for the children of active duty service members killed in the line of duty. 

W Ketchup is America’s Ketchup™ 






©2010 W Ketchup, LLC​


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## 300 H and H

waybomb said:


> Being in food, why would he want to get into food? Is something else under the Heinz umbrella? Payoff for Kerry? My head is spinnin here.


 
Great question,

I think this is his first food aquisition. I read the RR's are for sale. 

Regards, Kirk


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## FrancSevin

300 H and H said:


> Great question,
> 
> I think this is his first food aquisition. *I read the RR's are for sale. *
> 
> Regards, Kirk


 
That can't be true. I just read that Buffet only "_manages and grows_" companies.

BTW Buffet owns some Coca Cola and some Proctor and Gamble. About 25% of his porfolio.   Both are in the food industry.


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## Melensdad

Franc, I've never heard of "W" ketchup.  

RED GOLD is an Indiana grown and produced brand.  The ketchup is the best flavored ketchup I've ever tried, they also make great canned tomato products, their STEWED TOMATOES are fantastic.


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## FrancSevin

Melensdad said:


> Franc, I've never heard of "W" ketchup.
> 
> RED GOLD is an Indiana grown and produced brand. The ketchup is the best flavored ketchup I've ever tried, they also make great canned tomato products, their STEWED TOMATOES are fantastic.


 
I am already a RED Gold Fan.   

Just found "W" ketchup back when Kerry was running for Prez.  You can only buy it on line.


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## 300 H and H

waybomb said:


> Being in food, why would he want to get into food? Is something else under the Heinz umbrella? Payoff for Kerry? My head is spinnin here.


 
I wonder if he sees hard times ahead, or at least sluggish times. Food and fuel are essentials. He is already well exposed in the energy segment of the market. Maybe this is his grand entry into another essential staple, food. If so, this is just the beginning...

Regards, Kirk


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## FrancSevin

300 H and H said:


> I wonder if he sees hard times ahead, or at least sluggish times. Food and fuel are essentials. He is already well exposed in the energy segment of the market. Maybe this is his grand entry into another essential staple, food. If so, this is just the beginning...
> 
> Regards, Kirk


 
I don't see the same tea leaves here.

Buffet is selling his ConocoPhillips and Exon stocks.

Nothing conspirital going on.


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## grizzer

FrancSevin said:


> An opinion not supported by facts.
> 
> Bain Capital grew companies.  Just as Berkshire has done.
> Sometimes that means closing down bad operations.  Just as Berkshire has done.
> 
> There is no essential difference in the way both operated.  Except tha one is a friend of the GOP and one isn't.




I've been inside both Bain and Buffet acquisitions...

Bain sucks.


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## FrancSevin

grizzer said:


> I've been inside both Bain and Buffet acquisitions...
> 
> Bain sucks.


 
I don't have a clue what "inside" means

I do know what investment of capital means.

Both Bain and Bershire Hathway are investment firms. But they operate at different ends of the capitalistic system. One invests in up and coming companies while the other attempts to rescue companies in trouble. 

Suggesting Bain is some how evil, depite a 77% success rate at saving otherwise defunctor failing operations is like suggesting a surgeon is evil because 23% of his high risk patients die.

You are suggesting the strip miner is a hero because he hurts nothing to build new cars and the scrapper is evil because he melts down classic but useless old Buicks. Both are in the business of providing fresh materials from latent resources. Both are neccesary to create wealth , remove waste and rejuvinate an economy.


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## grizzer

300 H and H said:


> Great question,
> 
> I think this is his first food aquisition. I read the RR's are for sale.
> 
> Regards, Kirk



Berkshire sold miscellaneous small spur RR's as required to close the deal for BNSF.


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## 300 H and H

FrancSevin said:


> I don't see the same tea leaves here.
> 
> Buffet is selling his ConocoPhillips and Exon stocks.
> 
> Nothing conspirital going on.


 

Maybe selling his petroleum stocks to pay for Heins?  His is big in natural gas and pipelines for energy exposure....Refined liquid fuels margins fall in a sluggish economy, unless we are exporting large volumes. Those oil stocks have done well. Time for profit taking?

Regards, Kirk


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## 300 H and H

grizzer said:


> Berkshire sold miscellaneous small spur RR's as required to close the deal for BNSF.


 
I was under the impression they owned BNSF for years now...With coal a shrinking market, with Obummer and EPA, RR's are over capacity by alot. Shakeout ahead??

Regards, Kirk


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## luvs

heinz is a building i pass most days.
i could gripe- i shall refrain. there is continuous debate here (pgh.) over that place.


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## EastTexFrank

luvs said:


> heinz is a building i pass most days.



Damn, that must hurt.


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## grizzer

300 H and H said:


> I was under the impression they owned BNSF for years now...With coal a shrinking market, with Obummer and EPA, RR's are over capacity by alot. Shakeout ahead??
> 
> Regards, Kirk



BNSF is booming freight & tankers ~ 15 mins on the NW main haul route. Lots of oil in ND these days. 

Buffet lost his coveted AAA credit rating buying (above market) the 1/2 of BNSF he did not own. I still don't know why.


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## luvs

EastTexFrank said:


> Damn, that must hurt.


 
ex-lax eases the ail


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