Brazil’s 3G Capital eyes next big deal

BRAZIL’S 3G Capital Partners could be targetingfood or beverage giants such as Campbell Soup and PepsiCo.

BRAZILIAN investment firm 3G Capital Partners has used relentless ambition and big-name connections to become one of the world’s biggest acquirers of companies, including H.J. Heinz and Tim Hortons.

Now the firm is setting its sights on potential new targets that could give it control of even more of the world’s best-known consumer brands. In the past several weeks, investors have pledged about $US5 billion ($6.2bn) to a new takeover fund being formed by 3G, according to sources.

3G hasn’t publicly disclosed the amount raised or what it plans to do with the money, but 3G usually seeks only what it needs in equity for individual deals, using borrowed money to at least quadruple the firm’s buying power.

In a sign of the investment firm’s aspirations, executives are discussing the possibility of trying to buy a food or beverage company such as Campbell Soup, worth about $US14bn, or even PepsiCo, which has a stockmarket value of $US140bn, sources say.

People close to 3G, led by former professional tennis player Jorge Paulo Lemann, cautioned that no decisions had been made. 3G often studies targets for years before making a move.

And because a PepsiCo deal could be four times as large as Heinz and Tim Hortons combined, 3G might pursue only pieces of PepsiCo or try to join forces with Anheuser-Busch InBev, these people said.

Mr Lemann, his two partners and a group of Belgian families own a controlling stake in the beer maker. PepsiCo, Campbell and AB InBev declined to comment.

Some analysts have speculated that 3G also might be interested in Kellogg and Kraft Foods Group, each with more than $US20bn in stockmarket value. Kraft’s board of directors replaced the packaged-food giant’s chief executive last month, signalling impatience with a turnaround there, while Kellogg cut the size of payouts to some executives if the cereal maker is sold.

Some analysts saw Kellogg’s move as positioning for a possible sale. A spokeswoman said the change was made “to better align with evolving market practices”. A Kraft spokeswoman declined to comment.

The swirling interest in 3G’s next big deal is a sign of how far the firm has come in the past decade — and especially during the past few years. The purchases of Heinz and Tim Hortons for a combined $US36bn rank as the second- and fifth-largest takeovers in the consumer and retail sectors since the start of 2013.

“These guys have global ambitions,” says Warren Buffett, whose Berkshire Hathaway teamed up with 3G to buy the ketchup maker. Berkshire Hathaway also provided $US3bn in financing last year for the Tim Hortons purchase by Burger King Worldwide. 3G owns a 51 per cent stake in the combined company, Restaurant Brands International.

In addition to Mr Buffett, recent 3G investors include hedge-fund manager William Ackman, members of Colombia’s Santo Domingo family, seven-time Wimbledon men’s champion Roger Federer and JAB Holdings, which manages assets for Germany’s Reimann family, according to people familiar with 3G’s operations.

The Wall Street Journal