Heinz $23bn sale to Buffett, 3G to spur consolidation

Bottles of Heinz ketchup are on display in a shop in Hamburg, Germany yesterday. Warren Buffett’s Berkshire Hathaway and private equity firm 3G Capital will buy ketchup and baby food maker HJ Heinz Co for $23.2bn in cash, a deal that combines 3G’s ambitions in the food industry with Buffett’s hunt for growth. Including debt assumption, Heinz valued the transaction, which it called the largest in its industry’s history, at $28bn. Berkshire and 3G will pay $72.50 per share, a 19% premium to the stock’s previous all-time high. Analysts said the deal could be the first step in a broader wave of mergers for the food and beverage industry. “Maybe for the consumer staples group in general this may start some talk about consolidation. Even corporate entities are flush with cash, interest rates are low, it would seemingly make sense,” Edward Jones analyst Jack Russo said. The surprise purchase satisfies, at least in part, Buffett’s hunt for growth through acquisition.