Berkshire and 3G Confirm Largest Food-Industry Acquisition Ever

Shares of H. J. Heinz Company (NYSE:HNZ) shot up nearly 20 percent on Thursday morning after the company behind the namesake ketchup brand confirmed that it would be acquired by 3G Capital and Berkshire Hathaway (NYSE:BRKA)(NYSE:BRKB) in a transaction valued at $28 billion, the largest ever in the the food industry. Heinz shareholders will receive $72.50 in cash per common stock held, a 19 percent premium over the stock’s all-time high, as the company will be taken private.

“Heinz has strong, sustainable growth potential based on high quality standards, continuous innovation, excellent management and great tasting products,” commented Warren Buffett, chairman and CEO of Berkshire Hathaway. “Their global success is a testament to the power of investing behind strong brand equities and the strength of their management team and processes.”

Here’s a quick look at how Heinz has performed over the past few years. Earnings growth has moved back and forth, but has remained consistently strong. Revenues have climbed slowly and steadily since at least 2008, with an 8.8 percent jump in 2012.

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 9,886 10,010 10,490 10,710 11,650
Diluted EPS ($) 2.65 2.89 2.71 3.06 2.85

Heinz will report its next earnings on February 27. Analysts are looking for earnings of about $0.90 per share on revenue of $3.0 billion.

Quarter Oct. 31, 2011 Jan. 31, 2012 Apr. 30, 2012 Jul. 31, 2012 Oct. 31, 2012
Revenue ($) in millions 2,814 2,918 3,084 2,791 2,827
Diluted EPS ($) 0.73 0.88 0.54 0.80 0.90

The company’s consistently strong performance is reflected in its movement on the stock chart. While Heinz hasn’t outperformed competitors like Campbell Soup (NYSE:CPB) or ConAgra Foods (NYSE:CAG) over the past year, it has still outperformed the S&P 500 and proven to be remarkably stable with a beta of 0.35.

For its part, Campbell Soup was up over 3 percent on the Thursday of its announcement, and will release its next earnings on Friday before the markets open.

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