Warren Buffett revealed a taste for ketchup and baked beans yesterday as he joined a private equity firm to swallow food giant Heinz in a $28 billion (£18bn) deal.
The billionaire investor’s Berkshire Hathaway vehicle will split the $23.2bn cash cost with 3G Capital, a little-known firm with Brazilian roots that bought Burger King in 2010.
The two parties will also absorb Heinz’s debt and will be equal partners in the venture.
For Buffett, who usually makes his purchases outright on his own, the deal represents an unusual teaming up with private equity. He said that 3G approached him with the idea in December and that it was “my kind of deal”.
Known as the Sage of Omaha for his many highly lucrative investments, Buffett is renowned for a long-term approach and preference for down-to-earth businesses that he can relate to.
Noting that Heinz’s signature ketchup has been around for more than a century, he said: “It’s our kind of company. I’ve sampled it many times.”
Buffett has been on the hunt for a major purchase worth $20bn or more. The last time Berkshire did a deal on a similar scale to this was in 2008, when it helped fund Mars’ $23bn take-over of Wrigley.
The latest mega-deal has not completely satisfied Buffett’s prodigious appetite. He said Berkshire’s businesses continually replenish its cash supply, and added: “Anytime we see a deal is attractive and it’s our kind of business and we’ve got the money, I’m ready to go.”
For 3G the acquisition is something of a natural complement to its investment in Burger King, in which it still holds a major stake. The private equity firm will be Heinz’s operator after the deal closes, and the company will remain headquartered in Pittsburgh.
Heinz said the deal was unanimously approved by its board and is the largest takeover in its industry’s history. Its shares soared 20 per cent, or $12.09, to $72.59 in early New York Stock Exchange trading, slightly above the offer price, although Buffett has said he will not raise his bid.