Welcome, thank you for being here today for what is a truly historic moment for the H.J. Heinz Company, our shareholders, our 32,000 employees around the world, our customers, our global consumers, and for the great city of Pittsburgh, where the Heinz brand was first born. Heinz has entered into a definitive agreement to be acquired by an investment group led by Berkshire Hathaway and 3G Capital, two names with stellar reputations for doing the right thing for and with the businesses they own. Doing the right thing has been a credo of the H.J. Heinz Company since Henry J. Heinz introduced his first product in 1869. That simple premise that served us so well for all of these years has led to today's exciting announcement about a new partnership and a new platform for growing our great company.
Under terms of the agreement, Heinz shareholders will receive $72.50 in cash per share. That's a 19% premium to our all-time high share price and a 30% premium to our one-year average share price. It also represents almost 14 times EBITDA and over a 30% premium to our 10-year EBITDA average. Given this value and following a comprehensive review, our board has unanimously approved this transaction. The deal will deliver a substantial return for shareholders and ensure our commitment to Pittsburgh. Upon closing of this unprecedented transaction, Heinz will become a private enterprise. At $28 billion, this will be the largest acquisition of any company in the history of the food business. Our shareholders are being well rewarded as this transaction is occurring from a position of strength after 30 consecutive quarters of organic top-line growth and an all-time record market cap.
This is a great compliment to all who have contributed to the success of this company. More than a decade ago, we began a journey of transforming Heinz from a U.S.-centric food company into a global powerhouse with a more focused portfolio of strong brands and advantage categories. With two-thirds of our sales now generated outside the United States and 25% of our sales in emerging markets, the company has built significant global reach and capabilities. Today's announcement confirms the value of what we have achieved and the strength of the platform we have built for continued superior performance. This new chapter will be filled with many opportunities for Heinz to further expand our global reach, further strengthen our competitive position, and create new opportunities for our employees. I'm thrilled to share this news today for a variety of reasons.
First, we have succeeded in adding tremendous value for our shareholders on top of an already historic high share price that has climbed steadily during the past four years since the global financial crisis of 2008, recently reaching more than $60 per share. Prior to today's announcement, we have delivered cumulative total shareholder returns of 133% since 2006. At the agreed price of $72.50, total shareholder returns since 2006 would be a superior 177%. This is a terrific achievement on all fronts. Secondly, this is clearly a moment to reflect on what we have accomplished in the past and the opportunities that lie ahead for our iconic brands. There are reasons for the value of Heinz shares today.
Among them are great brands, our unique emerging markets platform, our global platform of products with number 1 and number 2 share positions in more than 50 countries, and most importantly, the strength and capabilities of our people. We are regularly recognized in the U.S. for doing the right thing. Forbes Magazine called us one of the most trustworthy companies in America for our transparency in accounting and record of prudent management. Just a few months ago, the American Customer Satisfaction Index once again ranked Heinz number 1 in customer satisfaction among all food manufacturers for a record 13th consecutive year. This enduring success reflects our employees' dedication to making exceptional products that consistently satisfy consumers. Heinz is a perennial leader in our industry because we focus every day on meeting the consumer's appetite for premium quality, great tasting, convenient foods that deliver value.
Quite simply, the opportunity to build upon this incredible platform and strengthen our world-leading brands will be greatly facilitated by the proposed new structure and our position as a private company. The deal provides Heinz with more flexibility, and as a private company, we can be even more focused, more competitive, more nimble, and benefit from much faster decision-making. On behalf of our board members and shareholders, I would like to publicly thank both Berkshire Hathaway and 3G Capital, who, by their offer, have acknowledged our success and the value of the Heinz brand and our global portfolio of businesses. We look forward to partnering with them in what I know will be an exciting new chapter in the history of Heinz. Berkshire Hathaway, led by the person that many refer to as the world's greatest investor, Warren Buffett, owns leading businesses across a variety of industries.
3G Capital is a global investment firm focused on long-term value creation with a particular emphasis on building and expanding great brands like Burger King and Budweiser. We cannot ask for a better endorsement in leadership than to have these highly respected individuals and their organizations behind the Heinz brand in the years to come. Finally, we are mindful of how we got here. Heinz has always been a company that has honored and leveraged our values and heritage. I believe that becoming a privately held food company allows us to deepen our roots in Pittsburgh and build more loyalty around our great brands. With an appreciation of this company's long-held values and relationships around the world, Berkshire Hathaway and 3G Capital have pledged to maintain Pittsburgh as Heinz's headquarters. The people of this region have contributed greatly to the success of Heinz over the decades.
Similarly, our employees outside of Pittsburgh in offices, factories, and warehouses around the globe represent us with distinction in all the communities where we operate. Therefore, our agreement also calls for ongoing philanthropic support of community initiatives and related programs, sponsorships, and goodwill. We have invested wisely over many years in being a responsible corporate citizen, committed to safe practices, environmental stewardship, and giving back to the community. This will not change. While our ownership will change, the great Heinz brand name will remain, along with the people and product consumers around the world have come to trust and love. While we are engaged in closing this transaction, we are keeping focused on our business in every respect. Before we begin our new chapter as a private company, Heinz shareholders and regulatory agencies must approve this deal.
We anticipate the transaction will close sometime in the third quarter of calendar 2013. This is a great day for Heinz shareholders, employees, customers, and consumers. I have worked for Heinz for 31 years, and like many of our colleagues, I'm exhilarated about what we do every day, and I'm even more thrilled about the possibilities that lie ahead. Alex Behring, Managing Partner of 3G Capital, will share his perspective on Heinz, how we got here today, and why this transaction is such a great event in so many ways. Following Alex's remarks, we will accept questions from the press in the room. Thank you, and with that, I'll turn it over to Alex.
Thank you, Bill, and thanks again for inviting me to be here today, and good morning. I was very excited coming into Pittsburgh today and seeing Heinz Field and being reminded that this is a city of champions. I think this is a historic day for the food industry. This is a landmark transaction, which I think will be a win for the company, its employees, its customers, its shareholders, and the investors in the long run as well. I think that the reasons that led us to start the conversations with Heinz that led to this transaction are simple and will come as no surprise to anyone. First, we're very excited about the brand. As Bill just said, it's a truly global brand. It has incredible consumer perception around the world, and it is really a powerhouse brand.
Number 2, the position the company is in, the enviable position that Heinz is in in the food industry on a global basis, being generally number 1 or number 2 in a variety of categories. They are attractive, growing, and that position, obviously, which brings me to the third reason that we were so excited to do this, is the people. The company would not have gotten to this position without the great work that was done in this company, in particular, the last 15 years under your leadership, Bill, where this company really was very successful. I'm not even going to mention the numbers that he just did, which speak for themselves, but it was really a remarkable run that put the company in this position.
It also goes without saying how pleased and how honored we are to be partners with Berkshire Hathaway, which obviously does not require any introduction. It was refreshing earlier this week, on Monday, when Bill and I had the pleasure of eating lunch with Warren Buffett in Omaha to see someone of his extraordinary accomplishments and stature, to see how excited he really is with the prospects of this business and how much he admires Bill, admires the brand, and the company. As Bill mentioned, we and our partners at 3G have been involved in a variety of consumer companies, more recently Burger King for 24 years in what today is Anheuser-Busch InBev. We're really all about long-term value creation. We really are committed to strong brands on a global basis, and we are continuously searching for excellence in everything that we are involved in.
I think as we, hopefully, are proud now to be part of the path forward here at Heinz, that we're very excited to be a part of that. Obviously, as Bill remarked earlier, we are very proud of the company's Pittsburgh heritage. This company's been around for 140 years, approximately here, so we are committed to keeping the headquarters here in Pittsburgh and to continue to be involved with Heinz Field and the community. That's all I had to say. Thank you for your attention, I guess we open for questions, Mike?
Well, before you do that, in order to really indoctrinate you to Pittsburgh, we have a Terrible Towel.
There you go.
Yeah. The good news is this is in the right color. I'm sure Dan Rooney will see this and immediately call me and say, "No, it's supposed to be gold," I'm saying it's red for Heinz Ketchup.
Thank you so much.
Your nine-year-old daughter, I'm sure, is going to take this away immediately.
Isabel will like this. Sure.
Okay, let's take questions. Use the microphone, and then introduce yourself so the people on the call can know who we are.
Drew Singer from Thomson Reuters. Good morning.
Good morning.
3G has been associated with some aggressive cost-cutting measures in the past. Is that a strategy we're likely to see here, and if so, in what areas have you identified?
I think that we've been involved in a variety of deals in the past. Some of them had a lot of cost optimization and opportunities in efficiency, and some of them didn't. I think here, it's very early to say. I think we're just getting involved and have several months ahead of us to get to understand the team and the people. This certainly is a company that, if you were to compare and contrast with some of the businesses that we got involved with in the past, this is a company that's doing extremely well as it is and has been doing extremely well for a number of years prior to our involvement.
Good morning, gentlemen. I'm Keith James from KDKA Radio. Mr. Johnson, when did this deal start, and who sought whom?
It started actually almost 8 weeks ago this week when Alex and Jorge Lemann, one of his partners, visited me. We had dinner. Actually, I thought they were coming to have dinner with me because they own Burger King, and they were a customer, and they were unhappy. Turns out they were a happy customer, and that led to further conversations. We did not solicit this. They came to me unsolicited. As a public company, when they visited us, we have a fiduciary responsibility to follow up on this. Shortly thereafter, we had additional conversations, and then a proposal was sent in, a proposal that we then took to the board, and the board has worked diligently to sort of evaluate this over the last 60 days.
I think it really began in earnest about 6 weeks ago, and we have been working diligently and assiduously over the last 6 weeks with the board and with the other side to get it to today's announcement.
I'm Dave Bondy, WPXI-TV here in Pittsburgh. To Mr. Behring, there's a lot of legislators, local leaders in the community, workers, and even residents who want the guarantee that Heinz will stay in Pittsburgh. Words are sometimes meaningless. What guarantee can you give this community?
We have said that publicly in a variety of instances. Warren Buffett has said it publicly, and it's on the merger agreement.
It's in the contract, which is about as strong as it can get. Warren Buffett on Monday gave us his assurances that he had absolutely no interest in this company leaving Pittsburgh.
Neither do we.
And
Hello, Caitlin Riley. Caitlin Riley with the Pittsburgh Post-Gazette. Just to follow up on that question, because you did mention that this might deepen the roots this company has in Pittsburgh. What change, if any, will people here see now once this merger is completed?
Well, I think initially you won't see any change. I think Pittsburgh has been Heinz's home since 1869, and we will continue to honor our commitments in Pittsburgh. You'll still see Heinz Field, you'll still see Heinz Chapel, you'll still see Heinz involved with a number of things. I think over time, I think to further your question, I think over time what you'll see is hopefully a platform for substantial global growth. I think one of the things that interested 3G and Mr. Buffett in moving into Heinz was the ability to use this as a platform to sort of get bigger around the global food industry, and Pittsburgh obviously being our headquarters, that would benefit Pittsburgh over a period of time. I think initially, and I probably think even a year from now, you won't see anything that really will change your view of Pittsburgh.
We will simply not be listed in the papers every day under the stock tables, we will continue to be here and continue to be very much involved with the community.
Regarding jobs, will there be a change in the number of jobs Heinz has here?
I think it's too early to say, as Alex said earlier, we have not had those discussions yet. Long term, it could go the other way. Long term, we may have more jobs here as the business gets bigger. Again, I think the thing you all have to keep in mind that makes this different than most situations is this company's being acquired from a position of strength. Our stock's been at an all-time high. We've had 30 consecutive quarters of organic top-line growth. This company's never been stronger. That doesn't mean there won't be changes going forward, I think ultimately this will be a platform for really doing bigger and better things in this industry.
It is interesting, as an aside, that if you look at the market today, a number of our peer companies are trading up on the news about us, and I will leave the implications of that to your own judgment and discretion. I do think that our goal here is to make this a bigger, even more global company, and I think that's a goal we share with 3G and with Mr. Buffett.
Bob Mayo from WTAE-TV here in Pittsburgh. You had meetings with some employees locally here earlier today. What is being conveyed to employees? What can you tell them right now and the families of employees that are listening, number 1? Number 2, what changes, if any, are ahead for benefits, for pensions, for working relationships with employees here?
Well, I met with employees. Mr. Behring was not in the meeting with employees. I met with employees this morning in what turned out for me to be a very emotional meeting. If you talk to my employees, I think I spent about half the time in tears and the other half telling jokes, and it's a very emotional day. Having said that, I also told the employees that certainly over the next four or five months before this initiative closes, there will be no changes, that they will continue to be expected to perform their jobs as usual, that business will continue to run the way it's been run, that leadership won't change. I think beyond that, I said to them, the more value we create as employees, the more opportunities we identify, I think the safer people will be.
I also said to them, there are certain things I couldn't comment on because I don't know the answer to it, and that's one of them. I don't know long term what the employment situation will be. We have 1,200 people in Pittsburgh between our North American operations and our world headquarters operation. I think given the fact that we're remaining in Pittsburgh and we have a desire to grow, I think there can be some assurances that a number of people are going to remain committed to this company and employed by this company. I think beyond that, it's just too early to comment because we just don't know.
Yes, ma'am.
Teresa Lindeman from the Pittsburgh Post-Gazette. You've long been a target of speculation about takeover and opportunity, why take this offer? Why listen this time?
Again, I think, the business is being acquired for the purposes of taking it private, Teresa, to use it as a global platform from which to build a bigger and better business. The offer was such that I simply felt compelled to take it to the board as part of my fiduciary responsibilities. The board really takes over in this process, the board hired outside representation and outside advisors on their own. The company had representatives and advisors also working on this, I think the board finally concluded that the value opportunity for the shareholders was just too great to pass up. This is the largest transaction in the history of the global food business. Think about that for a minute. That puts it in perspective.
Secondly, one of the things we agreed on at the very outset was I told them that Pittsburgh was non-negotiable, that Pittsburgh is my home. Pittsburgh is the home of all our people. Pittsburgh's been the home of this company since 1869. There have been six CEOs and five chairmen in 144 years of this company. It's a record I don't think any other company in America can match. Those were all very important considerations for the board, as well as the treatment of the employees as well as just the fact that our talent and capabilities lie here.
I think when you combined all that together, the board concluded that it was such a compelling proposition that they simply had no choice but to recommend it to shareholders, and I think the board does so enthusiastically and with a very good feeling about the future of the Heinz Company.
Harold Hayes, KDKA-TV. It's probably a similar question. Given the offer that was made, what would have been the disadvantages to operating as you had as a public company?
I think in a private setting, there are things we can do in terms of more rapid decision making. We don't have to worry about quarterly earnings and quarterly communications with investors and the market, which takes a fair amount of management time and is hugely distracting. Our view was, particularly being partnered with 3G, who brings a similar mindset, and Berkshire Hathaway, that the opportunity was to really be able to build this brand even more globally than it is today, to give our employees opportunities they maybe couldn't get in a public setting. Fundamentally, this company is returning to its roots. It's interesting, most of the people in this room are obviously too young to remember that. Fortunately, me too. This company was a private company for 80 years, and then it became a public company.
It's returning to the roots that H.J. built this company around, and that eventually one of the members of the generational changes decided to take public. I don't think from a Pittsburgh community standpoint, there's going to be anything that you'll notice differently about the company, and I think the employees are both enthusiastic, and frankly, there's a little angst about what this means for them. I can tell you the response we got today from the employees was terrific. At the end of the presentation, the employees applauded, cheered. They understand we're going to be very open with them, and I think it's just generally a better environment for us to deliver on our growth plans.
Drew Singer from Thomson Reuters. Speaking of the community, how will this transaction impact the relationship between Heinz and the Heinz Foundation? Will it see any kind of windfall from this? Will it see an increase or a decrease in funding over time?
Well, there's a number of Heinz foundations. We have a company foundation which we'll continue to fund in the normal manner that we've been funding in, and that's involved in a number of charitable activities, including our micronutrient program, which is a global program to feed children who are suffering from anemia or have vitamin A deficiencies, and that will continue to operate as it has. The other foundations, you'll have to ask them. It's really related to the family foundations. We have no idea how many shares they own of Heinz stock or what their positions are because they're not at a level that requires public disclosure. Again, I don't want to speak for them. I'll just speak for our own foundation.
Two more questions. Leah.
Leah Spencer at Pittsburgh Business Times. Does the management leadership stay on, and for how long, and what are your future plans, Bill?
That has not been determined. As part of this kind of transaction, management and the other side are not predominantly, entirely focused on getting the best deal for shareholders and employees. There's been no discussion about the future of management. There's been no discussion about my tenure and what happens going forward. There's been no discussion about any other members of management, nor will there be for a while. The contract has now been signed, and those discussions will probably take place over the next several months. Clearly, I've been in this job for 15 years. I'm the longest-tenured CEO in the food business, certainly in America and probably globally. I am way too young to retire. My wife, who's in the back of the room, said, "You're not sitting at home and having lunch with me." I hope to continue to do something.
If it's not here, I hope it's somewhere else. I can tell you that I don't play golf, don't play tennis. I jog, and believe me, I'm not good enough to jog for 14 hours a day, and I'm used to working 14 hours a day. Something is going to happen. In terms of our relationship, we have not had any discussions about the management team.
Very excited to have those discussions at the right time, we're precluded from having those discussions for the same reasons Bill just alluded to.
Mr. Behring, Keith James with KDKA Radio. For you, why this type of transaction as opposed to just buying a whole bunch of stock?
Keith, we like to be involved in this company's long term. I think that this, as Bill alluded to, we like a private scenario. We think the private scenario does allow us very speedy decision making. It does allow you to focus on what's right medium term, what's right long term, and not necessarily on what's right every quarter. We were attracted by that. I think that format suited very well our partners at Berkshire Hathaway as well.
Okay, that's it. Thanks, everyone, for coming. I appreciate you.