Back to top

Analyst Blog

Ketchup maker, H.J. Heinz Company , has received all the required regulatory approvals in relation to its pending sale to 3G Capital and Berkshire Hathaway, Inc. (BRK.B - Analyst Report). The transaction is expected to be closed on or about Jun 7.

In mid-Feb 2013, Heinz agreed to be acquired by an investment group led by Warren Buffet’s company, Berkshire Hathaway,and the private Brazilian investment firm, 3G Capital, for $28 billion, including debt. Heinz’s shareholders overwhelmingly approved the merger at a special meeting held in New York on Apr 30. Late last month, HNZ received an approval from the Chinese regulatory authorities and was awaiting antitrust clearance in Russia and the European Union to seal the deal.

As per the terms of the pending merger, Heinz’s shareholders will receive $72.50 per share, a 19% premium to its all-time high share price. Heinz will become a private company after the completion of the acquisition.

Berkshire Hathaway, led by Warren Buffett, owns leading businesses across a variety of industries, while 3G Capital is a global investment firm holding stakes in companies like fast food chain, Burger King Worldwide, Inc .

Both Berkshire Hathaway and 3G Capital are known to invest in iconic businesses and brands and broaden them further. Heinz has a robust global portfolio of leading brands, which focuses on three attractive and growing food categories: ketchup and sauces, meals and snacks, and infant/nutrition. The company’s largest and fastest growing product category is ketchup and sauces led by Heinz, the iconic #1 ketchup brand. The investment firms are acquiring Heinz from a strong position where it is consistently delivering solid organic growth, showing continued and strong improvement in the emerging markets, making robust marketing investments, continuously innovating and reducing expenses aggressively.

Heinz carries a Zacks Rank #2 (Buy). Another food company that has been doing well consistently is Flower Foods Inc. (FLO - Snapshot Report) which carries a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.