Heinz Corporation Harvard Case Solution & Analysis

1.)           Context and Deal background of Heinz


a) Groundwork For the acquisition of Heinz

Nelson Peltz is one of the most important persons for Heinz. He was a candid and active investor and he acquired 5.4% share in Heinz in recent times. He acquired his Stake from his investment funds from Train Fund Management. After acquiring the stake in Heinz, he made various demands such as selling of non-core assets, repurchasing of stock more aggressively and cut unnecessary overhead and assets which deteriorated the company under any financial trouble. He also demanded his representation in the board of governors by asking 5 board seats out of 12. Soon after this, the company initiated a massive overhaul of the company on the advice of Nelson Peltz to turn the company towards the right direction. They fired more than 2700 Heinz employees, shutdown 15 factories which were non-profitable or having irrelevant operation and bought back Heinz’s share worth more than $1 Billion. Majority of Peltz’srecommendations and demands were accepted and he also received 2 board seats out of 12 seats in the board of governors of the company. So his demands and recommendations laid the foundation for the acquisition of Heinz by 3G and Berkshire Hathaway.So we can conclude that Nelson Peltz was the person responsible for the acquisition of Heinz as turnaround started by Nelson Peltz was successful enough to attract the acquisition so that they were interested in acquiring Heinz.

Heinz Corporation Harvard Case Solution & Analysis

b)         Contextual Background of Heinz Acquisition Deal

After the massive globalFinancial Crisis, the economy of USA was not only healing after the destruction of financial crisis but also showing a 2% GDP growth which was also forecasted at a rate of 3%. After the Financial crisis, customer confidence was growing as their spending was increasing which leads to increase in overall inventory. Many economic analysts also predicted that the USA economy is ongoing a recovering process. Many investors also smeltgrowing investment opportunities globally. This also encouraged the Mergers and Acquisition activists as M&A activities were growing rapidly.

Meanwhile,investors were also pressurizing the management to get rid of non-core assets in order to further expand their margin through acquisitions. As Heinz was performing an overhaul of the company by not only reducing its employees but also selling of its noncore assets. It was visible for the acquisitions activist that Heinz is on a successful path after its overhaul and massive reconstruction of the company which was initiated by Nelson Peltz. After this success by Heinz, 3G and Berkshire Hathaway were both interested in acquiring Heinz together. Both these companies informed Heinz CEO OF their interest in acquiring their company. They made an offer of $70 per share outstanding which waspresented in front of board members but rejected. The board members also discussed other options such as merging with other entities or continue as a standalone company. Further, a long process of over 40 days, the investors offered a price of $72.5 per share which wasaccepted by Heinz board members valuing a total worth of 28 Billion dollars..................

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