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Ketchup Kingpins

This past week saw Heinz sold to Warren Buffett and 3G Capital, a Brazillian investment firm to the tune of 23 BILLION dollars. This move by Buffett surprised me. I felt it was relatively safe for him. Heinz is the kind of American mainstay that isn’t a high-risk/high-reward investment. It’s similar to investing in Pepsi; it’s stable.

I'm not saying that this was a bad move at all.  It's a good acquisition, but it deviates from the formula that's made Mr. Buffett the investment Demi-God that he is.  Keep in mind this is the same guy who invested in the tobacco industry because he said that they cost a penny to produce, could be sold for a dollar, and were addictive.  What can you really do with a ketchup company besides make ketchup?  Perhaps partner with a really good french fry company?  Maybe promote your brand and try to get it in every restaurant possible?  It's a good marriage for 3G because they just paid 3 billion for Burger King, and looking ahead, can use the Heinz and Burger King acquisitions to increase their footprint on the global food service industry.  They're looking at this move, not just as acquiring a product, but a distribution network as well, which is definitely a commendable way to think of it.  After the acquisition, it's important to mention that stock shares of Heinz jumped 12.02 at closing.  Score one for Mr. Buffett, but he is undoubtedly the public face of this deal.  This is really a giant leap forward for 3G and a win for globalization as a whole.