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 $3.3 billion in 2010.
Buffett likes getting good deals for well-run companies that generate healthy returns and show growth potential. Heinz may be an American institution, but in the 2013 fiscal year almost a quarter of its sales came from emerging markets. The simplicity of its core product mirrors one of Buffett’s long-held investments, Coca-Cola Co., a position he’s steadily built since 1988.
| 2013 Deals of the Year Jim Renwick & Team Barclays Antonio Weiss & Team Lazard Christian Lesueur & Team UBS James ("Jimmy") Lee Jr. & Team JPMorgan Chase & Co. Marco Gonçalves & Team BTG Pactual Marisa Drew & Team Credit Suisse Group Geoffrey Austin & Team Moelis & Co. Anthony Noto & Team Goldman Sachs Group Adam Taetle & Team Barclays Kenneth Hirsch & Team Goldman Sachs Group |
True to form, Buffett reportedly has no plans to ever sell a share in Heinz; he and Lemann don’t appear to have hatched this leveraged buyout with an exit in mind. “It’s a strategic deal as opposed to a financial deal,” says Weiss, 47, who was Lazard’s Paris-based global head of M&A until 2009. “It’s a long-term commitment to the company, to the industry.”
But Heinz began restructuring almost immediately, a move that points to Lemann and 3G’s hands-on approach. Chief executive William Johnson was ousted in favor of cost-cutter Bernardo Hees, previously CEO of Burger King. In November management announced plans to trim 1,350 jobs by closing three North American plants. Heinz isn’t a traditional private equity deal, Weiss notes: “There is no limited partner relationship in an institutional sense, with a return requirement within some time period.” As a result, he explains, the investor group can focus on long-term growth.
Bucking the Trend
With these extraordinary closed and pending deals,
our ten rainmakers earned their keep in choppy markets.
| Rank | Deal | Estimated Fees ($ Millions) * |
| 1 | U.K. bank Barclays follows a £5.8 billion ($9.1 billion) rights issue with a $2 billion hybrid bond offering. | $1832 |
| 2 | Warren 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 |
| 3 | U.S. telecom Verizon Communications agrees to give Vodafone $130 billion for the British carrier’s 45 percent stake in Verizon Wireless. | $93–103 |
| 4 | Founder Michael Dell and Silver Lake Partners privatize U.S. computer maker Dell for $24.9 billion.1 | $82–92 |
| 5 | Brazilian phone company Oi and Portugal Telecom agree to a $15.7 billion tie-up under the former’s name. | $70–90 |
| 6 | Cable giant Liberty Global buys the U.K.’s Virgin Media for $25.5 billion. | $882 |
| 7 | Advertising firms Omnicom Group and Publicis Groupe agree to a $35 billion Franco-American merger of equals. | $50–70 |
| 8 | Social media company Twitter launches a $2.1 billion initial public offering on the New York Stock Exchange. | $682 |
| 9 | China’s Shuanghui International Holdings closes a $7 billion buyout of U.S. pork producer Smithfield Foods. | $51–61 |
| 10 | iPhone 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. | ||
