Kraft Heinz owners include Buffett, ex-Brazilian surfer
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The deal marrying these two well-known companies is not only a big one, as it creates the fifth-biggest food and beverage company on earth; it also involves iconic investor Warren Buffett. Jason Allen
The owners of the new food conglomerate Kraft Heinz include billionaire investor Warren Buffet and a former surfer who almost didn’t make it to his second year at Harvard.
On Wednesday, Kraft Foods Group (KRFT), the maker of Velveeta cheese, said it will merge with ketchup maker H.J. Heinz Co. in a deal that will create the third largest food and beverage company in North America and the fifth largest food and beverage company in the world.
The combined company will be named The Kraft Heinz Company and and will have annual revenues of $ 28 billion, including with eight brands worth more than $ 1 billion each.
Behind the deal is Buffett’s Berkshire Hathaway and investment firm 3G Capital. 3G is far less known than Berkshire Hathaway despite the fact that its founders own massive North American food brands, including Burger King and Anheuser-Busch InBev.
BUFFETT:Famed investor sees a gain of $ 4.1M on Kraft so far
SURPRISE:Few funds saw Kraft deal coming
3G has offices in New York City and Rio de Janeiro. Its founders are mainly Brazilian.
One of the founders, Jorge Paulo Lemann, is the richest man in Brazil with a net worth of $ 25 billion, according to Forbes. Lemann, 75, is also a former professional tennis player and has competed in Wimbledon and the Davis Cup.
Lemann’s blessed life also included a short stint as a slacker that nearly prevented him from graduating Harvard, he said in a recent speech.
“My academic record was nothing special. I studied, but very little,” he said of his freshman year at the storied university. Instead, Lemann spent his time resenting the cold and thinking about tennis and surfing, he said.
“I was one of the best surfers in Rio de Janeiro,” he said.
Lemann celebrated the last day of school with fireworks and was caught tossing one out a window. Harvard told him to take a year off “to mature,” he said.
The incident pushed Lemann to hunker down. “I went from being one of the worst students to one of the best,” he said.
3G was only founded in 2004, but Lemann has been working with two the firm’s five founding partners, Carlos Alberto Sicupira and Marcel Herrmann Telles, since the 1970s, according to a book about them, called “Dream Big.”
The trio started off working at a brokerage firm founded by Lemann and others called Garantia. Lemann later branched off with his own investment bank by the same name, and later joined forces with Sicupira and Telles to create Brazil’s first private equity firm, GP Investimentos.
They made their fortunes in good part buying up Brazilian breweries and then merging them them with international beer brands.
They engineered a merger with Belgium’s Interbrew NV in 2004, for example, followed by the $ 52 billion union with Anheuser-Busch Cos. in 2008. The new company, Anheuser-Busch InBevto, is the world’s largest brewer with control over 25% of the worldwide market.
In 2010, 3G bought Burger King for $ 4 billion. In 2013, 3G teamed up with Buffett’s Berkshire Hathaway to buy Heinz in a deal valued at $ 28 billion. Last year, the company made headlines again when it bought restaurant chain Tim Hortons, which is now part of Restaurant Brands International with Burger King.
In his letter to shareholders in February, Buffett gave a shout out to Lemman, calling him a “friend” and praising their partnership in Heinz.
“I knew immediately that this partnership would work well from both a personal and financial standpoint,” Buffett said, adding that he expects “to partner with 3G in more activities.”
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