Warren Buffett Acquires H. J. Heinz

LONDON -- The shares of H. J. Heinz (UNKNOWN: HNZ.DL  ) have rocketed 20% to $72.50 in early New York trade today after the food group revealed a bid involving Warren Buffett.

Heinz said Buffett's investment vehicle, Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) , and investment firm 3G Capital would combine to pay shareholders $72.50 in cash for each share.

Heinz said the bid represented a 19% premium to its all-time high share price and a 30% premium to its one-year average share price. Including debt, the offer values Heinz at $28 billion.

William R. Johnson, chairman and chief executive of Heinz, said: "The Heinz brand is one of the most respected brands in the global food industry and this historic transaction provides tremendous value to Heinz shareholders. ... With Heinz stock recently at an all-time high and 30 consecutive quarters of organic topline growth, Heinz is being acquired from a position of strength."

Warren Buffett added:

"Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products. Their global success is a testament to the power of investing behind strong brand equities and the strength of their management team and processes. We are very pleased to be a part of this partnership."

The initial press release did not disclose how much Berkshire Hathaway and 3G Capital would each contribute to the deal.

Prior to today, Wall Street experts had expected Heinz to produce current-year earnings of $3.53 per share, indicating a buyout valuation of about 20 times possible profits. In addition, Heinz's $0.52 per-share quarterly dividend suggests that Buffett and 3G Capital may collect a 2.9% income.

While some Buffett-type investors may have missed an opportunity with Heinz, there is another stock which the billionaire investor fancies and which remains priced near the level where Buffett bought. You can learn all about this other Buffett purchase by reading this special report, which describes the history, the prospects, and the useful 4% dividend income of the company in question. Just click here to learn more -- the report is free.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2255720, ~/Articles/ArticleHandler.aspx, 11/28/2014 12:20:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement