“Our lines are out.”
In his latest annual letter to shareholders, Berkshire Hathaway CEO Warren Buffett wrote these four words when addressing potential acquisition plans for the company.
And on Wednesday, Buffett made good on this statement as H.J. Heinz — which Buffett owns along with private equity firm 3G Capital — announced a deal to merge with Kraft Foods.
Buffett noted that at the end of 2014, Berkshire Hathaway owned 9 1/2 companies that on their own would be listed in the Fortune 500 if they were independent. Heinz is the 1/2.
And now you can add Kraft Foods to that list.
Buffett and 3G will provide $US10 billion in financing for the deal, splitting the cost of a $US16.50 per share special dividend that is being paid out to Kraft shareholders as part of the merger.
After the deal is complete, Kraft and Heinz will be the 3rd-largest consumer foods brand in North America with annual sales of $US22.2 billion on the continent. And as Buffett also said in his annual letter, he is super bullish on the US, saying that the “mother lode” of opportunities runs through the country.
In an interview on CNBC following the announcement, Buffett said negotiations for the deal took about 4 weeks and Buffett added that he plans to own Kraft “forever.”
In a statement announcing the deal, Buffett said simply, “This is my kind of transaction.”