Margareta Pagano: The Goose said to the Owl: Fancy a Penguin?

When two billionaire friends met on a business flight, the talk turned to birds and business deals. The $28bn swoop on Heinz was the result

Having a Brazilian just took on a whole new meaning. Each time you squirt ketchup on your chips or put beans on the toast it's going to be courtesy of one of Brazil's richest men, Jorge Paulo Lemann, one of the country's shrewdest deal-makers and a former tennis champion.

He is clubbing together with one of America's wealthiest men, Warren Buffett, and his Berkshire Hathaway group, to pay $28bn (£18bn) to take the HJ Heinz empire private.

Mr Lemann runs and controls a big chunk of 3G Capital, a private equity company which owns Burger King and has an even chunkier stake in the world's biggest brewer, Anheuser-Busch InBev.

Aged 73, he is not yet as old as Mr Buffett, nor does he have quite as much money – only $18bn or so – but he's the one driving this takeover. Indeed, the deal deviates in many ways from Mr Buffett's usual style as it's more like a leveraged buyout – the sort of transaction he has criticised in the past.

Mr Lemann and Mr Buffett are paying $72.50 per share, which is already a 20 per cent premium to the closing price valuing Heinz at $23bn. In addition, they are paying off $5bn in debt. Heinz is being split half-half between 3G and Berkshire, with each company putting in about $4bn in cash for the equity while the rest is being financed with new debt. Mr Buffett is paying another $8bn to get preferred stock, which will give an annual dividend of about 9 per cent.

The structure may not be true to type, but it is a classic Buffett business: everyday food brands turning over cash like a slot machine.

Heinz started with horseradish sauce in 1869, and now has 150 brands that are either in the number one or two slots in the world; that's good branding. He's had a file on Heinz since 1980. But it was only when Mr Lemann, whose codename during the deal was Goose, and Mr Buffett, who was known as the Owl, met up again flying together on a business trip in December last year that they hatched the Heinz bid – codenamed Penguin.

The birds get on well and have known each other since sitting on the Gillette board a decade ago. The roles are clear: Mr Lemann's 3G managers will run the Heinz operations while Mr Buffett is there to enjoy the ride. In an interview with CNBC on Thursday, the octogenarian Sage of Omaha was on form, saying: "It's a great partnership for us, and any partnership where I don't have to do the work is my kind of partnership." Believe that if you will.

What everyone in America now wants to know is whether this strike is the start of a new wave of corporate activity. Of course, Mr Buffett said no; but that's because he still has another $27bn in the bank to go shooting for more elephants, and doesn't want to push up prices. But investors think so – food stocks shot up on the news.

The other big question is what 3G will do with Heinz. Mr Buffett says the management team will stay in place, but that's hard to see. One of the big fears is that 3G's team will want to improve margins by slashing costs and cutting jobs – which is what corporate activist, Nelson Peltz, has been urging the board to do for years.

As well as shaking up Heinz, the impact of the takeover will spill over into US political life as the takeover makes Teresa Heinz Kerry, wife of John Kerry, the Secretary of State, even richer. Married to the late John Heinz III, she inherited his fortune when he died, and stands to make millions more, so it will be fascinating to see whether Mr Kerry does run for president in 2016.

It's not new for presidential candidates to be backed by family money but one backed with 57 varieties could make for a spicy campaign.

Start your day with The Independent, sign up for daily news emails
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

SThree: Talent Acquisition Consultant

£22500 - £27000 per annum + OTE £45K: SThree: Since our inception in 1986, STh...

Recruitment Genius: Experienced Financial Advisers and Paraplanners

Negotiable: Recruitment Genius: This extremely successful and well-established...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map