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The buyers will pay $72.50 a share, compared with yesterday’s closing price of $60.48, according to a statement on Thursday. Berkshire will spend about $12 billion to $13 billion on the deal for the maker of condiments and Ore-Ida potato snacks, Buffett told CNBC. The deal will also be financed with cash from 3G affiliates, plus the rollover of existing debt, and is valued at about $28 billion including debt, according to the statement.
Heinz benefits from “very powerful consumer goodwill in the developed markets and a very early start in China and India, two of the largest developing markets,” Tom Russo, a partner at Berkshire investor Gardner Russo & Gardner said in a phone interview. “It will not be hard to service the debt.”
Buffett, 82, has been seeking deals after the cash pile at Omaha, Nebraska-based Berkshire climbed to more than $45 billion. He has previously wagered on consumer products through equity investments in Coca-Cola Co and he helped finance Mars Inc’s purchase of chewing gum maker Wm Wrigley Jr Co Brazil’s Lemann, 73, is worth about $19 billion based on holdings in Anheuser-Busch InBev NV and Burger King Worldwide Inc, according to the Bloomberg Billionaires Index.
Emerging markets
Heinz shares climbed to $72.45 in early trading at 9:23 am in New York. Berkshire B shares advanced 13 cents to $98.10. The condiment maker, led by CEO Bill Johnson since 1998, had gained 17 per cent in the past 12 months as it boosted sales in developing economies.
Heinz in November said fiscal second-quarter sales in emerging markets rose 13 per cent, excluding the effects of foreign currency fluctuations and acquisitions or divestitures.
Heinz elected billionaire Nelson Peltz to the board in 2006 following a six-month proxy fight. Peltz had been pushing the company to trim costs and sell assets to boost the ketchup maker’s share price.
