Berkshire Hathaway, the conglomerate controlled by billionaire investor Warren Buffett, becomes the majority shareholder of H.J. Heinz after exercising a warrant.
Berkshire Hathaway now owns 52.5% of H.J. Heinz
In a regulatory filing, H.J. Heinz reported that Berkshire Hathaway exercised a warrant to acquire 46,195,652 shares of common stock for a total price of $461,956.52.
The warrant was issued in connection with $23 billion acquisition of the ketchup maker by Berkshire Hathaway and an affiliate of 3G Capital Partners.
The newly acquired shares account 5.4% of the outstanding common stock of H.J. Heinz. Following the transaction, Berkshire Hathaway’s stockholding in the ketchup maker increased to 52.5%.
Kraft, Heinz merger
Buffett’s conglomerate exercised a warrant prior to the planned merger of H.J. Heinz with Kraft Foods Group. The combined company valued at approximately $80 billion will create one of the largest food and beverage companies worldwide.
The shareholders of Kraft Foods are scheduled to vote on the proposed merger on July 1. The combined company will be called Kraft Heinz. The shareholders of H.J. Heinz would acquire 51% of the combined company.
Berkshire Hathaway would own 26% of Kraft Heinz after the completion of the deal. It is the second largest common stock investment of Buffett's conglomerate.
3G Capital, which is headed by Jorge Paulo Lemann, would handle the daily operations of the company.
Many fear that Berkshire Hathaway and 3G Capital would close plants and cut jobs as they seek to cut $1.5 billion in annual costs.
During the annual meeting of Berkshire Hathaway in May, Buffett said, “Efficiency is required over time in capitalism. I really tip my hat to what the 3G people have done.”
Kraft Foods expects to complete its merger with H.J Heinz a few days after obtaining approval from its shareholders. The combined company is expected to generate revenue of approximately 28 billion. Kraft Heinz portfolio of brands would include Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia among others.
Gamco Investors Founder and CEO Mario Gabelli considered the Kraft Heinz merger as a good financial engineering.
The shares of Kraft Foods are trading $87.60 per share, up by more than 2% at the time of this writing around 3:09 in the afternoon in New York.
