H. J. Heinz Company recently announced plans to redeem its outstanding convertible preferred shares that are not converted to its common stock before a stipulated date.
The decision was made in connection with Heinz’s pending sale to an investment group led by Warren Buffet’s company, Berkshire Hathaway, Inc. (BRK.B - Analyst Report) and private Brazilian investment firm, 3G Capital for $28 billion, including debt.
Heinz has offered holders of all 5,787 outstanding shares of its Third Cumulative Preferred Stock, $1.70 First Series to either receive the redemption price for their preferred shares or to convert their preferred shares into Heinz common stock. The company will redeem any outstanding shares of the concerned series that are not converted into Heinz’s common stock at or before 5:00 pm eastern time on Apr 8, 2013. The preferred shares will be redeemed at an aggregate redemption price of $29.03 per share, which includes accrued and unpaid dividends in addition to the redemption price.
Berkshire Hathaway, led by Warren Buffett, owns leading businesses across a variety of industries, while 3G Capital is a global investment firm holding stake in companies like fast food chain, Burger King Worldwide, Inc (BKW - Analyst Report). Both Berkshire Hathaway and 3G Capital are known to invest in iconic businesses and brands and broadening them further.
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. The deal is expected to be closed in the third quarter of this calendar year. HNZ will become a private company after the completion of the acquisition.
Heinz carries a Zacks Rank #3. Another food company that has been doing well consistently is ConAgra Food, Inc (CAG - Analyst Report) – Zacks Rank #1 (Strong Buy).