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.

Arts and Entertainment
Characters in the new series are based on real people, say its creators, unlike Arya and Clegane the Dog in ‘Game of Thrones’
tv'The Last Kingdom' embraces politics, religion, warfare, courage, love and loyalty, say creators
Sport
Sergio Romero saves Wesley Sneijder's penalty
world cup 2014But after defeating the Dutch, Lionel Messi and Argentina will walk out at the Maracana on Sunday as underdogs against Germany
Sport
Scoreboard at the end of the semi-final World Cup match between Brazil and Germany at The Mineirao Stadium in Belo Horizonte
Sport
'Saddest man in Brazil' takes defeat with good grace, handing replica trophy to German fans
PROMOTED VIDEO
News
peopleThe Game of Thrones author said speculation about his health and death was 'offensive'
Arts and Entertainment
Martin Freeman and Lauren O'Neil in Jamie Lloyd's Richard III
theatreReview: The monarch's malign magnetism and diabolic effrontery aren’t felt
News
Glamour magazine hosts a yoga class with Yogalosophy author Mandy Ingber on June 10, 2013 in New York City.
newsFather Padraig O'Baoill said the exercise was 'unsavoury' in a weekly parish newsletter
Extras
indybest
News
people'She is unstoppable', says Jean Paul Gaultier at Paris show
Sport
Alexis Sanchez and apparently his barber Carlos Moles in Barcelona today
football
Arts and Entertainment
Miley Cyrus has her magic LSD brain stolen in this crazy video produced with The Flaming Lips
video
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Arts and Entertainment
In his own words: Oscar Wilde in 1882
theatreNew play by the Oscar Wilde's grandson reveals what the Irish wit said at his trials - and what they reveal about the man
News
people
Arts and Entertainment
Unless films such as Guardians of the Galaxy, pictured, can buck the trend, this summer could be the first in 13 years that not a single Hollywood blockbuster takes $300m
filmWith US films earning record-breaking amounts at the Chinese box office, Hollywood is more than happy to take its lead from its new-found Asian audience
News
The garage was up for sale in Canning Place Mews for £500,000
newsGarage for sale for £500,000
Life and Style
tech
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Associate CXL Consultant

£40000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: CXL, Triple Po...

Financial Planning Manager, Qual Accountant, £380

£300 - £380 per day: Orgtel: Financial Planning Manager, Banking , London, £30...

Business Analyst - Financial Services, Trading Systems, Agile

£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fina...

Day In a Page

The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice
Hollywood targets Asian audiences as US films enjoy record-breaking run at Chinese box office

Hollywood targets Asian audiences

The world's second biggest movie market is fast becoming the Hollywood studios' most crucial
Grindr founder Joel Simkhai: 'I've found love on my dating app - and my mum keeps trying to hook me up!'

Grindr founder Joel Simkhai: 'I've found love on my dating app'

Five years on from its launch and Grindr is the world's most popular dating app for gay men. Its founder Joel Simkhai answers his critics, describes his isolation as a child
Autocorrect has its uses but it can go rogue with embarrassing results - so is it time to ditch it?

Is it time to ditch autocorrect?

Matthew J X Malady persuaded friends to message manually instead, but failed to factor in fat fingers and drunk texting
10 best girls' summer dresses

Frock chick: 10 best girls' summer dresses

Get them ready for the holidays with these cool and pretty options 
Westminster’s dark secret: Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together

Westminster’s dark secret

Adultery, homosexuality, sadomasochism and abuse of children were all seemingly lumped together
A History of the First World War in 100 Moments: Dulce et decorum est - a life cut short for a poet whose work achieved immortality

A History of the First World War in 100 Moments

Dulce et decorum est: a life cut short for a poet whose work achieved immortality
Google tells popular music website to censor album cover art in 'sexually explicit content' ban

Naked censorship?

The strange case of Google, the music website and the nudity take-down requests
Howzat! 8 best cricket bats

Howzat! 8 best cricket bats

As England take on India at Trent Bridge, here is our pick of the high-performing bats to help you up your run-count this summer 
Brazil vs Germany World Cup 2014 comment: David Luiz falls from leader figure to symbol of national humiliation

David Luiz falls from leader figure to symbol of national humiliation

Captain appears to give up as shocking 7-1 World Cup semi-final defeat threatens ramifications in Brazil