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Buffett, 3G Capital To Buy H.J. Heinz

Feb 14, 2013, 12:25 PM
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Warren Buffett's Berkshire Hathaway and 3G Capital will buy H.J. Heinz. for $72.50 a share, or $23.2 billion in cash.

Including debt assumption, Heinz valued the deal at $28 billion -- which it called the largest in food-industry history.

In addition to the iconic brand's ketchup and condiment products, Heinz makes products including Classico spaghetti sauces, Smart Ones frozen meals and Ore-Ida potatoes.

Berkshire Hathaway and 3G said that Heinz will remain headquartered in Pittsburgh, and have "an opportunity to drive further growth" as a private enterprise, reported The Huffington Post.

Heinz, which reported sales of $11.6 billion last year, has looked overseas for growth in recent times, including a 2010 acquisition of China's Foodstar, which makes Master soy sauce and fermented-bean curd products. Heinz projects that emerging markets will account for one-quarter of its sales.

The new owners have not yet provided any specifics about potential structural or operational changes.

HuffPo quoted Brian Sozzi, chief equities analyst for NBG Productions, as noting that Heinz's brand equity, built up over more than 140 years (it was founded in 1869), has enabled the company to raise prices even in today's intensely competitive grocery environment. 

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

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