Warren E Buffett has made a habit of criticising ruthless Wall Street bankers and rapacious private equity firms over the years. As recently as last month, he railed against both in his annual letter to his shareholders at Berkshire Hathaway.
Yet for Buffett, a genteel billionaire who has managed to put a friendly face on big business, one private equity firm stands apart from the rest.
3G Capital, the Brazilian private equity firm co-founded by the billionaire financier Jorge Paulo Lemann, has in recent years emerged as Buffett's preferred business partner in striking multibillion-dollar deals.
On Wednesday, 3G and Berkshire Hathaway teamed up to orchestrate a merger between Kraft, the big processed food maker, and Heinz, which the two companies own. Combining the companies will create a global food and beverage behemoth worth nearly $100 billion.
The deal comes just two years after 3G and Berkshire Hathaway acquired Heinz for $23 billion. And last year, Buffett lent $3 billion to 3G when another of its companies, Burger King, acquired the Canadian restaurant chain Tim Hortons. In that case, Buffett essentially provided the leverage for a leveraged buyout.
The success of these deals has resulted in 3G and Buffett publicly proclaiming their mutual affection for each other.
On Wednesday, 3G's managing partner, Alex Behring, sang the praises of Buffett while discussing the merger of Heinz and Kraft in a call with investors.
"This partnership has been a key driving factor in Heinz's enormous success to date and will be a key driving factor in the success of the Kraft Heinz Company," he said. "Berkshire is a name that needs no introduction."
Buffett, speaking on CNBC on Wednesday, was equally effusive about his Brazilian partners. "I knew they were wonderful going into the Heinz deal," Buffett said. "In terms of ability, in terms of integrity, every aspect of it. 3G has been a perfect partner."
Yet in many ways, 3G follows the very private equity playbook that Buffett derides. 3G is known for its relentless cost-cutting and job elimination when it takes over a company. Shortly after 3G and Berkshire acquired Heinz, 11 of the top 12 managers at Heinz were replaced. Since the deal was completed, 7,000 employees have been dismissed.
When 3G took over Burger King, it sold the company jet, scrapped an annual $1-million party at an Italian villa and moved executives at the company's Miami offices from mahogany suites to an open floor of cubicles.
"When they first arrive, it can be pretty ugly for the people working there," said Cristiane Correa, who wrote a book about 3G called "Dream Big." "Their mindset is: if it doesn't generate any revenue, why are we spending money on that?"
What is different about 3G is that like Buffett, 3G professes to be a long-term owner of the businesses it buys. Since assembling the brewing company Anheuser-Busch InBev and acquiring Burger King and Heinz, the Brazilian firm has shown no signs of trying to sell the companies. Instead, they are being used as platforms to strike more deals.
"3G aren't buying things to sell," Buffett said. "The other private equity firms, they buy companies with the idea of IPO-ing them or selling them to a competitor."
But with 3G, Buffett argued, "I don't think it's even proper to call them a private equity firm."
Instead, "They're buying to keep, just like we're buying to keep," Buffett said. "You can't put them in the same category of the firms that are basically in the category of buying and reselling companies."
Behring reiterated that 3G was buying with an aim to hold, following a template that has worked for Buffett in more than 50 years in business.
"Both Berkshire and 3G Capital are long-term-oriented investors with shared vision and common values," he said. "Both Berkshire and 3G look for strong, enduring brands, and they seek to build and grow these brands through both meaningful operational improvements and a focus on execution."
For all its trophy assets and its enormous success, 3G remains relatively unknown, even its home country.
"They are by far the most successful story in terms of entrepreneurship in Brazil," Correa said. "They were not really known in Brazil until five or six years ago. They are really low profile."
Lemann, a co-founder of the firm, graduated from Harvard in 1961 and returned to Brazil to begin a career in finance. A former Brazilian tennis champion, he once played at Wimbledon.
As a young man, he built a small brokerage firm into Banco de Investimentos Garantia, which emerged as one of Brazil's largest investment banks. Then, in 1998, he sold the firm to Credit Suisse for about $675 million. (3G is short for "3 from Garantia," named after Lemann and the firm's other two co-founders.)
With the proceeds from that sale, Lemann and his business partners began building up their portfolio of breweries, eventually creating AmBev, which later acquired Anheuser-Busch, the maker of Budweiser and other beers.
Now 75, Lemann has handed over daily operations of 3G to a handful of trusted associates, including Behring.
Buffett met Lemann decades ago, when the two served together on the board at Gillette. Since then, the two men have grown close.
Now, investors and analysts are already looking ahead to the next deal Buffett and 3G might strike together.
"There is no finish line," Correa said. "I think there are going to be many more."
© 2015 The New York Times News Service
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