Buffett-Backed Heinz Sees $160 Million Cost on Job Cuts
HJ Heinz Co., the ketchup maker taken private by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A) and Jorge Paulo Lemann’s 3G Capital, expects about $160 million in severance-related expenses tied to job cuts.
About 1,200 employees are affected as part a plan to eliminate corporate and field positions worldwide, Pittsburgh-based Heinz said today in a regulatory filing. The company employed about 31,900 as of April 28, the end of its fiscal year.
Managers appointed by 3G, including new Chief Executive Officer Bernardo Hees, are cutting costs as the company faces payments tied to the financing of the deal. Heinz also shut a factory in China and reduced manufacturing at a U.K. facility, according to today’s filing.
“The company is investing in productivity initiatives designed to increase manufacturing effectiveness and efficiency,” according to today’s filing.
Buffett, 83, took an $8 billion preferred stake with a 9 percent dividend, meaning Heinz has to pay his Omaha, Nebraska-based company $720 million a year on those securities. The $23.3 billion takeover was completed in June.
Hees that month announced the departure of 11 top executives. The company said in August that it was eliminating 600 office jobs in the U.S. and Canada, with more than half the cuts in Pittsburgh. Heinz also said it was weighing the elimination of about 250 positions in the U.K. and Ireland.
Heinz posted a net loss of $75.9 million in the period from Feb. 8 through July 28 as the company incurred merger-related costs, according to today’s filing. Feb. 8 is the date a merger subsidiary was created for the deal. 6
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