Executive Summary

Heinz is one of the leading food products company in the world. The company belongs to Food &
Beverage industry; the industry has many economic implications. After 2008-09’s financial crisis,
the economy was slowly reviving so do the firms of different industries but Heinz somehow lacked
that development and faced a lot of pressure from its stakeholders. This case states the acquisition
of Heinz by 3G and Berkshire Hathaway. The main concern of this case is the fair value of the
acquisition. Even though the acquirers have offered a $72.50 for per value share this case refers to
the genuine fair value of the company. Also some other relevant problems that arise as a general
question such as the future consequences of the stakeholders and the headquarter. The role of
activist investors are also a query for this acquisition.
Before going to the analysis part, a simple portray of economy, industry and company analysis is
done for this case. In the economy analysis, we tried to relate the economy with the industry and
quantitatively justify the nature of industry and its relativity with economy. For the industry
analysis part, we used PESTLE analysis to gauge the different variable’s impact on the industry
including political, economic, social, legal etc. Then we used Porter’s five forces model to see the
industry competitiveness. In the next section, we calculated different ratio for the company that
gives us a clear picture of the financial situation of the company. We had to analyze the strength,
weakness, opportunities and threat for the Heinz.
In order to incorporate and analyze the problems of this case we had to think of alternative courses
of actions that can be taken to solve the problems. For this, we have separated the alternatives into
three categories in which we have analyzed the standalone valuation of the company, the valuation
of the company with synergy along with three more different scenarios to get a detailed picture of
the values for the firm. We used discounted cash Flow method for the alternative’s valuation.
Lastly, we have done a relative valuation for the company by using the multiples of different
competitors given in the case. Even though there were many competitors for the company but a
robust observation gives some companies to which the product line matches. Therefore, after
getting different values under each of the alternatives with its scenarios we weighted those values
and ultimately got a value per share that solves the main problem of this case, which is to justify
if the firm was valued fairly or not. With our estimated price, we could ensure that the offered
price was a fair price for Heinz.
The simulation and sensitivity analysis is done for each of the alternatives to estimate the overall
price range in each, and to see the most sensitive variables for the company. After the
recommendation of fair price valuation, we answered qualitatively for the remaining questions of
stakeholders, Headquarter operations and activist investors. Overall, the report for the case
includes addressing the problems and giving thorough analysis of the solutions.