Brazilian private equity firm 3G Capital is putting its stamp on Heinz, which it acquired along with Warren Buffett’s Berkshire Hathaway earlier this year. Bernardo Hees, CEO of 3G portfolio company Burger King, was named the new head of the ketchup maker.
Hees, who is also a 3G partner, made big changes at Burger King in a short amount of time. He’s expected to have a similar impact at Heinz, so here’s a suggestion: One way to make a big splash would be to acquire Campbell’s Soup.
At Burger King, Hees immediately cut costs and replaced a slew of executives. Hees also expanded the chain’s emerging markets footprint, and profit went up. Burger King’s performance improved enough that 3G decided to sell a 29% stake through the public markets last year, raking in $1.4 billion from that offering.
Heinz doesn’t need as much cost cutting, and it has a strong emerging markets strategy. That’s why Heinz was an attractive takeover target in the first place. So it will be interesting to see what Hees does. Buffett praised 3G’s operational and management skills, but he also complimented current Heinz CEO Bill Johnson, who could get a more than $200 million payout if he leaves the company. 3G and Berkshire Hathaway are discussing Johnson’s interest in having a continued role at Heinz, the company said in a press release.
One of the things that has been on Johnson’s bucket list, according to sources, is a purchase of Campbell’s Soup. Besides cutting costs, growing through acquisitions is another way to move the needle on performance. Johnson has periodically praised Campbell’s as a great company. Heinz has also done a lot of work studying a possible Campbell’s deal, the sources said.
Part of the holdup is Campbell’s founders, the Dorrance family, who are the largest shareholder in the soup maker and reluctant to sell. But with the backing of Berkshire and 3G Capital, which are known for paying good premiums in order to do deals on friendly terms, Heinz may want to give it another shot. (Heinz declined to comment.)
Attention already turned to Campbell’s Soup after the Heinz deal as a natural target. Campbell’s Soup also needs to cut costs, for which Hees has shown a natural talent. Shares of other consumer product companies also went up in the wake of the Heinz sale, and it’s expected to be a hot space for M&A. The deal world is still waiting for the natural marriage between Nestle and General Mills.
As for Heinz, its new owner 3G has shown it’s an ambitious acquirer with a penchant for iconic brands. Campbell’s Soup falls right into that category.
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