H.J. Heinz Company (NYSE:HNZ) and its board of directors have been charged with a lawsuit by investors in connection with the proposal of Warren Buffet’s Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and 3G Capital to acquire the company for $23 billion, according to a report from Bloomberg.
The investors filed their complaint in the Western District Court of Pennsylvania located in Pittsburg with an argument that the $23 billion acquisition proposal is unfair.
According to James Clem, one of the shareholders of H.J. Heinz Company (NYSE:HNZ), the board of directors of the company used an “unfair process” in the buyout transaction, he cited that the management and the board of directors of the company were able to cash in 5.6 million shares (illiquid holdings) for more than $400 million.
The lawyer representing the investors requested a court order to prevent H.J. Heinz Company (NYSE:HNZ) from proceeding with its transaction with Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and 3G Capital under the current terms. In addition, the investors also requested the court to grant a jury trial on the case.
Last week, Heinz CEO, Bill Johnson said the acquisition proposal of Warren Buffet’s conglomerate and 3G Capital is the “highest price ever paid for a food business in the global food industry.” According to him, the deal is terrific and he believed it is beneficial for the Heinz’s shareholders.
Johnson said Buffet and 3G Capital saw an opportunity to aquire a wonderful brand and take it to a level the company may not be able to achieve on its own. He emphasized that the market penetration of Heinz is less than two or three billion people.
Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) and 3G Capital agreed to pay $72.50 per share, a 20 percent premium of the closing price of Heinz stock on February 13. The deal is considered as one of the largest acquisition transactions in the food industry.
A related report from Bloomberg cited that the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) are working together in criminal investigation in connection with trading anomalies before the announcement of H.J. Heinz Company (NYSE:HNZ)'s agreement to sell the company. The SEC filed a complaint against unknown traders who gained $1.7 million over suspicious trading prior to the announcement of the deal.