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Heinz to be Acquired by Berkshire Hathaway and 3G Capital (HNZ, BRK.A)

H.J. Heinz (NYSE: HNZ) announced on Thursday that it has agreed to be acquired by Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK.A) and private equity firm 3G Capital in deal estimated at more than $28 billion, which will also include debt, sending shares of ketchup making giant up by nearly 20% in premarket trading.

The deal is expected to close by third quarter of this year, subject to approval from Heinz’s shareholders and regulatory authorities.

The offer price of $72.50 represents a 20% premium to HNZ’s closing price on Wednesday. However, with shares hitting to an all time high of $72.60 in premarket trading, there is possibility that shareholders might ask for a sweeter offer.

While Berkshire and 3G will each contribute $4.5 billion in cash for the deal, debt financing will be secured from Wells Fargo and JP Morgan Chase. 3G is a global investment firm.

Both Berkshire Hathaway and 3G have said that Pittsburgh will continue to remain as the global headquarter for Heinz.

Warren Buffett, who is a strong believer in value investing concept, was very eager in the recent past to do another deal. With the acquisition of this packaged food company, Buffet will own a business that not only is known for its iconic ketchup brand, but also some other popular brands such as Classico pasta sauce, Ore-Ida potatoes, and Smart Ones frozen meals.

“This is my kind of deal and my kind of partner. Heinz is our kind of company with fantastic brands,” said Buffet to CNBC’s “Squawk Box”.

Commenting over the deal, Heinz CEO William Johnson said in statement,  “The Heinz brand is one of the most respected brands in the global food industry and this historic transaction provides tremendous value to Heinz shareholders.”

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