Warren Buffett buys Heinz
Warren Buffett, one of the richest man in the world because he is one of the most successful investors ever, just bought via his Berkshire Hathaway company and together with private equity firm 3G Heinz, the well-known food company famous for its ketchup and baked beans.
The price they are spending to buy the company is $28 billion (£18bn) and this means $72.5 per share, about 20% higher than the share price on Wednesday and thus a good deal for the current shareholders. The price is about twice the turnover and thus high. Nevertheless, Mr Buffett is nicknamed the "sage of Omaha" because many of his investments are very successful and thus he believes the company is worth paying the price. One of the reasons his investments are successful is because he doesn't buy things he doesn't understand.
(That is why today I no longer buy shares because large companies seem to lie so much I can't be sure they are healthy or may go bankrupt after I buy the shares. Also, as some people have so many shares, they are able to sell their shares whenever they think they reached a peak and then so many shares come on the markets people think something is wrong with the company ans as a result sell their shares, resulting in a possible collapse of a healthy company. Further, as too many people are loosing or fear loosing their job, people buy less and thus companies will continue to struggle unless people again believe they have a future. But that will only be possible when work and thus money is shared. And the rich have to give the example when e.g. pay fair taxes or invest money in the economy as some do).
And here Mr Buffett proved to be different from many other investors because he called for a fairer tax system so that the poor no longer pay higher percentage in taxes than the wealthy. Also, he invest in Heinz at a moment the economy is doing bad, maybe because he wants to invest in Heinz in order to be able to provide work for others.
On the other hand, he is not a charity as otherwise he would not be so rich (although there is no problem being rich if one uses wealth as something positive for society such as giving people work). Still, as "sage of Omaha" he will only invest when he believes he can make money out of the company (this can include putting first money in the company to optimise production and later return). Indeed, Heinz invested recently lots of money in developing economies and thus probably can continue to grow (very likely at the expense of local companies as this company may become too big for competitors) and thus make money for Mr Buffett.
Another reason for buying the company may be that he may think food prices will continue to rise as many organisations predict, including the UN. Indeed, many farmland is used to produce plants to burn as biofuel and not use for food while human population continuous to expand and climate already destroyed quite some crops worldwide. And thus an investment in food companies during crises may be an excellent idea as higher food prices may mean more profits as even the poor have to buy food to survive, unless too much crops are destroyed.
Although Mr Buffett may be sincere buying Heinz to employ people, he buys Heinz together with a private equity firm, and people working at this kind of companies are often known for having no conscience (although there are exceptions). And thus they probably buy Heinz to make as much profits for themselves as possible, maybe even closing less profitable companies what may result in more unemployment in some regions but higher profits for the investors. And even when Mr Buffett may not want to destroy sections of the company, he will have to accept some of the decisions of the equity firm. Future will tell what may happen. But I hope the investment will result in work for many people.
The price they are spending to buy the company is $28 billion (£18bn) and this means $72.5 per share, about 20% higher than the share price on Wednesday and thus a good deal for the current shareholders. The price is about twice the turnover and thus high. Nevertheless, Mr Buffett is nicknamed the "sage of Omaha" because many of his investments are very successful and thus he believes the company is worth paying the price. One of the reasons his investments are successful is because he doesn't buy things he doesn't understand.
(That is why today I no longer buy shares because large companies seem to lie so much I can't be sure they are healthy or may go bankrupt after I buy the shares. Also, as some people have so many shares, they are able to sell their shares whenever they think they reached a peak and then so many shares come on the markets people think something is wrong with the company ans as a result sell their shares, resulting in a possible collapse of a healthy company. Further, as too many people are loosing or fear loosing their job, people buy less and thus companies will continue to struggle unless people again believe they have a future. But that will only be possible when work and thus money is shared. And the rich have to give the example when e.g. pay fair taxes or invest money in the economy as some do).
And here Mr Buffett proved to be different from many other investors because he called for a fairer tax system so that the poor no longer pay higher percentage in taxes than the wealthy. Also, he invest in Heinz at a moment the economy is doing bad, maybe because he wants to invest in Heinz in order to be able to provide work for others.
On the other hand, he is not a charity as otherwise he would not be so rich (although there is no problem being rich if one uses wealth as something positive for society such as giving people work). Still, as "sage of Omaha" he will only invest when he believes he can make money out of the company (this can include putting first money in the company to optimise production and later return). Indeed, Heinz invested recently lots of money in developing economies and thus probably can continue to grow (very likely at the expense of local companies as this company may become too big for competitors) and thus make money for Mr Buffett.
Another reason for buying the company may be that he may think food prices will continue to rise as many organisations predict, including the UN. Indeed, many farmland is used to produce plants to burn as biofuel and not use for food while human population continuous to expand and climate already destroyed quite some crops worldwide. And thus an investment in food companies during crises may be an excellent idea as higher food prices may mean more profits as even the poor have to buy food to survive, unless too much crops are destroyed.
Although Mr Buffett may be sincere buying Heinz to employ people, he buys Heinz together with a private equity firm, and people working at this kind of companies are often known for having no conscience (although there are exceptions). And thus they probably buy Heinz to make as much profits for themselves as possible, maybe even closing less profitable companies what may result in more unemployment in some regions but higher profits for the investors. And even when Mr Buffett may not want to destroy sections of the company, he will have to accept some of the decisions of the equity firm. Future will tell what may happen. But I hope the investment will result in work for many people.
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