Buffett and Lemann Buy H.J. Heinz Co.

Two of the world’s richest men,  Warren Buffet and Jorge Paulo Lemann, are buying one of the most well-known food companies in the country. Buffett and Lemann buy H.J. Heinz Co. in a  joint purchase. The cash deal will total $28 million, part of which includes making the new owners responsible for the $4 billion debt of the food conglomerate. Buffett’s company Berkshire Hathaway will shell out $13 billion in cash to complete the deal.

An Elephant
Buffett and Lemann are personal friends and business associates. Buffett has had his eye on Heinz for a long time. His purchase of the company is in keeping with Buffett’s investment philosophy of investing in “The Inevitables,” or products and businesses with at least a decade of business growth ahead. The move also fits with Buffett’s desire to make a large acquisition, or “an elephant” investment.

The two dealmakers of the biggest deal in the food industry, under their respective companies Berkshire Hathaway and 3G Capital, will own Heinz equally.

Warren Buffet
Warren Buffett of Berkshire Hathaway is the world’s third richest man with a fortune that is worth $46 billion and is listed as the top philanthropist of 2012. Assuming the $4 billion debt should be no big deal for Buffett. Each year, the second richest American (preceded only by his good friend Microsoft founder Bill Gates) donates at least $3 billion to his charities. Buffett is considered the most successful investor and at the ripe age of 82, shows no signs of slowing down.

Buffett’s purchase of Heinz adds to his diverse portfolio of well-known and profitable companies, including shares in American Express, Wal-Mart, Kraft, Coca-Cola and Tesco. He has been keeping tab on the Heinz company for over three decades.

Jorge Paulo Lemann
Brazilian/Swiss investor and philanthropist Jorge Lemann is the founder of 3G Capital and is listed as the 69th richest man in the world. He has stakes in fast food chain Burger King and the world’s biggest beer maker, Anheuser-Busch Inbev beer, which carries the top brands Budweiser, Beck’s and Stella Artois.

H.J. Heinz Co.
Heinz is a company that has been around for over 140 years since it was founded in 1869. Heinz is most well known for ketchup, for which 650 million bottles are sold each year. It also carries Heinz Beanz, HP Sauce, Lea Perrins, Classico pasta, WeightWatchers, Smart Ones, Ore-Ida potatoes and Complan and many other products that are sold in more than 200 countries the world over.

Last year, Heinz posted a net income of $1.1 billion and total revenues of $11.6 billion.

Shareholders got offered 20% more than the stock value of Heinz when Buffett and Lemann bought the company. Chairman, President and Chief Executive of Heinz William Johnson declared that Buffet’s offer price was a “tremendous value.”