Traverse City Record-Eagle

Business

February 15, 2013

Buffett dips into ketchup

NEW YORK (AP) — Billionaire Warren Buffett, the most closely watched investor in America, is putting his money in ketchup, agreeing to buy H.J. Heinz Co. for $23.3 billion in the richest deal ever in the food industry.

For his money, the Oracle of Omaha gets one of the nation’s oldest and most familiar brands, one that’s in refrigerators and kitchen cupboards all over the U.S.

The deal is intended to help Heinz accelerate its expansion from a dominant American name into a presence on grocery shelves worldwide. The Pittsburgh-based company also makes Classico pasta sauces and Ore-Ida potatoes, as well as a growing stable of sauces suited to regional tastes around the world.

Buffett’s investment firm, Berkshire Hathaway, is teaming with investment firm 3G Capital to snap up Heinz, which had long been a subject of takeover speculation. New York-based 3G is best known for its acquisitions of Burger King and its role in the deals that created AnheuserBusch InBev, the world’s biggest beer maker.

The deal, expected to close in the third quarter, sent shares of Heinz soaring. The company’s stock price was up nearly 20 percent at $72.45 in afternoon trading on the New York Stock Exchange.

Berkshire picked up steam, too. Its Class A shares gained $1,490, or about 1 percent, to close Thursday at $149,240.

Berkshire remains the most expensive US stock but it’s still below its all-time high of $151,650, reached in December 2007. That came before the financial turmoil of 2008 and just after an exceptionally profitable quarter that was helped by a $2 billion investment gain.

The plans to take Heinz private apparently began to take shape on a plane in early December.

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