2013 Deals of the Year: Warren Buffett’s Heinz Buyout Cuts the Mustard

Oracle of Omaha’s Berkshire Hathaway and Brazilian investment firm 3G Capital drop $27.4 billion for the U.S. ketchup maker.


Acquisitions involving Warren Buffett just seem to go off without a hitch. Witness the octogenarian Oracle of Omaha’s recent purchase of H.J. Heinz Co., whose shareholders relished his bid to take the ketchup giant private. The $27.4 billion buyout, which closed on June 7, paid $72.50 for Pittsburgh-based Heinz’s outstanding shares, a 20 percent premium on their closing price at the February 14 deal announcement.

Buffett’s Berkshire Hathaway split the bill 50-50 with 3G Capital, an investment firm led by fellow billionaire Jorge Paulo Lemann, Brazil’s richest man. 3G, whose main office is in New York, had already shown a taste for U.S. edibles with global appeal by picking up Burger King Holdings for $3.3 billion in 2010.

Buffett likes getting good deals for well-run companies that generate healthy returns and show growth potential. Heinz may be an American institution, but in the 2013 fiscal year almost a quarter of its sales came from emerging markets. The simplicity of its core product mirrors one of Buffett’s long-held investments, Coca-Cola Co., a position he’s steadily built since 1988.

2013 Deals of the Year
Jim Renwick & Team
Antonio Weiss & Team
Christian Lesueur & Team
James (“Jimmy”) Lee Jr. & Team
JPMorgan Chase & Co.
Marco Gonçalves & Team
BTG Pactual
Marisa Drew & Team
Credit Suisse Group
Geoffrey Austin & Team
Moelis & Co.
Anthony Noto & Team
Goldman Sachs Group
Adam Taetle & Team
Kenneth Hirsch & Team
Goldman Sachs Group

Antonio Weiss, who acted as lead banker to Omaha, Nebraska–based Berkshire Hathaway and 3G, advised on the Burger King buyout. Weiss, the New York–based global head of investment banking for Lazard, fronted a team that included managing director Alexander Hecker. JPMorgan Chase & Co. and Wells Fargo & Co. also advised the consortium; representing Heinz were Bank of America Merrill Lynch and independent investment banks Centerview Partners and Moelis & Co. Total advisory fees were as high as $107 million.

True to form, Buffett reportedly has no plans to ever sell a share in Heinz; he and Lemann don’t appear to have hatched this leveraged buyout with an exit in mind. “It’s a strategic deal as opposed to a financial deal,” says Weiss, 47, who was Lazard’s Paris-based global head of M&A until 2009. “It’s a long-term commitment to the company, to the industry.”

But Heinz began restructuring almost immediately, a move that points to Lemann and 3G’s hands-on approach. Chief executive William Johnson was ousted in favor of cost-cutter Bernardo Hees, previously CEO of Burger King. In November management announced plans to trim 1,350 jobs by closing three North American plants. Heinz isn’t a traditional private equity deal, Weiss notes: “There is no limited partner relationship in an institutional sense, with a return requirement within some time period.” As a result, he explains, the investor group can focus on long-term growth.


Bucking the Trend
With these extraordinary closed and pending deals,
our ten rainmakers earned their keep in choppy markets.

($ Millions) *
1U.K. bank Barclays follows a £5.8 billion ($9.1 billion) rights issue with a $2 billion hybrid bond offering.$1832
2Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital pay $27.4 billion to take ketchup maker H.J. Heinz Co. private.$97–107
3U.S. telecom Verizon Communications agrees to give Vodafone $130 billion for the British carrier’s 45 percent stake in Verizon Wireless.$93–103
4Founder Michael Dell and Silver Lake Partners privatize U.S. computer maker Dell for $24.9 billion.1$82–92
5Brazilian phone company Oi and Portugal Telecom agree to a $15.7 billion tie-up under the former’s name.$70–90
6Cable giant Liberty Global buys the U.K.’s Virgin Media for $25.5 billion.$882
7Advertising firms Omnicom Group and Publicis Groupe agree to a $35 billion Franco-American merger of equals.$50–70
8Social media company Twitter launches a $2.1 billion initial public offering on the New York Stock Exchange.$682
9China’s Shuanghui International Holdings closes a $7 billion buyout of U.S. pork producer Smithfield Foods.$51–61
10iPhone maker Apple issues $17 billion worth of bonds.$532

* Estimates unless otherwise noted. M&A totals only include advisory fees;
debt and equity totals only include underwriting fees.

1 Deal value provided by Dell.

2 Publicly disclosed.

Source: Thomson Reuters/Freeman Consulting Services.