Berkshire Hathaway, 3G buying Heinz for $28bn

HJ Heinz announced Thursday that it agreed to be acquired by Warren Buffett's Berkshire Hathaway and 3G Capital Management in the largest deal in the food industry's history.

Berkshire and 3G will pay USD 72.50 a share, or USD 28 billion, including debt, for the ketchup making giant.

Shares of Heinz were up more than 20 percent in pre-market trading following the announcement.

Berkshire and and 3G will each put up USD 4.4 billion in equity for the deal, along with debt financing from JPMorgan Chase and Wells Fargo. Berkshire is also buying USD 8 billion of preferred stock that pays 9 percent.

3G, a Brazilian investment firm, owns a majority stake in Burger King, which it acquired in 2010 for USD 4 billion. 3G was founded by Jorge Paulo Lemann, Carlos Alberto Sicupira, Marcel Hermann Telles, Roberto Thompson Motta, and Alex Behring.

3G's Lemann approached Buffett in mid-December about a possible deal, and both approached William Johnson, Heinz's chairman, president and CEO, soon after. The first offer was made in mid-January.

"We look forward to partnering with Berkshire Hathaway and 3G Capital, both greatly respected investors, in what will be an exciting new chapter in the history of Heinz," Johnson said in a statement.

The deal was first announced on CNBC, and later confirmed by Heinz. In an interview with CNBC's "Squawk Box," Buffett, Berkshire Hathaway chairman and CEO, said that from an operational standpoint "Heinz will be 3G's baby."

Buffett said he first started talking about the Heinz deal back in December, "but I have a file on Heinz that goes back to 1980."

"This is my kind of deal and my kind of partner," he added. "Heinz is our kind of company with fantastic brands."

Buffett noted that the Heinz deal leaves Berkshire with enough cash on hand to bag another "elephant."

Berkshire and 3G were both advised by Lazard, JPMorgan, and Wells Fargo. 3G's legal advisor was Kirkland & Ellis and Berkshire was advised by Munger, Tolles & Olson.

Heinz was advised by Bank of America/Merrill Lynch, Centerview Partners, and Davis Polk & Wardwell.

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