H.J Heinz M&A Harvard Case Solution & Analysis

Question # 01:

Verily,the company has been positioning an assortment of products in the international markets and offering value added products to its customers in order to gather a larger market share. On a macro level, the company has been expanding business operations throughout the world through acquisitions, mergers and joint ventures. Heinz tends to seek companies with established products in the emerging markets where the countrieswish to expand to, such asTurkey, Vietnam, Philippines and Brazil. The company has been focusing on being well positioned in the emerging countries. Others including Indonesia, India, Latin America and Russia as the middle class consumers continue to expand. The company has been holding a dominant market position in more than 50 countries all around the world. This is so because the company is providing value added and exceptional quality products. The overall business strategy of the company includes accelerating growth in the emerging markets, growing the core portfolio and leveraging and strengthening on a global scale.

Question # 02:

H.JHeinz has announced to be acquired by a private-equity firm 3G and Berkshire Hathaway for 28 billion dollars, which means the value of per share tends to be $72.50. It may represent the 20% premium to the closing price of the shares. Due to the cash payout, shareholders of Heinz couldavoid the transaction cost. Even though it seems to be a good and fair deal for the shareholders of Heinz in many ways; the valuation implications tends to be positive for the groups considering the rich price paid, the buyer is Berkshire Hathaway and lastly, the fundamentals of Heinz have been challenged (minimal growth of EBIT in past 12 years), the shareholders might not get the anticipated benefits and the expected cost saving might not materialize or it may take a lot of time to materialize due to many factors. This might include; long timeframe for the process of acquisition, loss of key customers, loss of control over the business operations, loss of key management personnel and other unforeseen conditions. The shareholders’ value could be deteriorated due to increasing financial distress risks.

H.J Heinz M&A Harvard Case Solution & Analysis

Question # 03:

The transaction committee of the board has approved the acquisition after considering all the factors. The earnings per share of Heinz haveexpected to be increased by 2018. The management has also expected to increase the sales in North America but the timing of the transactions is rated perfect because value of Heinz tends to be increased and the market seems to be growing. Not only this, the price of the shares is fairly high but the market and economic conditions may last an impact on this favorably or unfavorably.

Question # 04:

Heinz Company has been leveraging their standardized products and processes in order to realize and uncover the areas of value. The leaders of Heinz have recognized the challenges and issues in their business,namely, tracking formulas, specification and supply of the product across a diverse and global market. Along the way, the company has standardized the ways to develop and track the specifications of the products, reduced the number of used ingredients, increased global and worldwide communication about the product and supplier information and improved the process that the company uses to develop and introduce products into the market............

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