Buffett Buying Heinz – Not As Expensive as Appears

Berkshire Hathaway buying Heinz is unlike any deal Buffett has ever done. In his past deals he was always a passive owner.

Buffett Buying Heinz - Not As Expensive as Appears

Berkshire Hathaway buying Heinz is unlike any deal Buffett has ever done. In his past deals he was always a passive owner – he let existing management continue to run the company. In this case 3G, a private equity firm that has done terrific turnarounds in the past, will be the new management.  They are putting in $1 billion of capital for half of ownership, but also a lot of sweat capital.  On the surface Buffett is paying 20 times earnings, a fairly high multiple even for this high-quality business, but 3G involvement will likely elevate the earnings power of Heinz significantly over time.  So this is a classic Buffett deal in one respect: Buffett is saying, I’m willing to pay a premium for a quality business that has long-term pricing power. (Heinz scores great on both counts).  Buffett is willing to pay a premium for it, but this time the premium is less than it appears on the surface.

Please read the following important disclosure here.

Enjoyed this read?

Share it with someone who’d love it too!

New to investing?

Explore these valuable guides to get started.

Value Investing
Student
Curriculum

The 6
Commandments
of Value
Investing

Letter to
a Young
Investor

Related Articles

Current thoughts on Tesla (TSLA)

Current thoughts on Tesla

Tesla market value of $780 billion mostly reflects Elon's future dreams, not car sales. The reality? Only $100-180 billion tied to the actual vehicle business.
Europe Can’t Hide Behind America Anymore

Europe Can’t Hide Behind America Anymore

Americans have always outspent Europe on defense, but to be fair, we have a currency advantage. Our military might elevated our currency to reserve status.
Europe’s New Status: The Children’s Table (IMA Client Dinner 2025 Video)

IMA’s March 2025 Client Dinner Video

Once a year, my company, IMA, hosts a dinner for our clients. Most of them live outside of Denver—and many outside the U.S.—so this event gives us a rare and meaningful chance to meet face-to-face, often for the first time, and really get to know each other.
The Reputational Bankruptcy of the American Dollar

The Reputational Bankruptcy of the American Dollar

The US dollar will likely continue to get weaker, which is inflationary for the US. Let me start with some easily identifiable reasons.

Leave a Comment