Buffett's Brazilian Pal Is the Anti-Batista
Beer, breakfast, burgers, ketchup and now finger food: Brazilian billionaire Jorge Paulo Lemann's appetite knows no bounds. Latin America's most aggressive asset hunter has teamed up with Warren Buffett of Berkshire Hathaway to acquire Illinois-based snack giant Kraft Foods and then merge it with condiment maker H.J. Heinz.
Taking over one global giant -- then making it even bigger -- is exactly what Lemann and his partners at 3G Capital, a Brazil-based private equity firm, have done best for the last two decades. Kraft adds another legacy brand to 3G's spreading crown and also consolidates Lemann's unlikely reputation as Latin America's most understated billionaire.
"I wouldn't say Lemann is ashamed of being rich, but he's the last one you'll hear boasting about it," said Roberto Teixeira da Costa, Lemann's longtime friend and a former president of the Brazilian securities and exchange commission, known by its Portuguese initials CVM.
Such circumspection seems uncommon for Brazil, where the media has feasted on the riches-to-rags story of self-styled industrial maverick Eike Batista -- a charmer with PowerPoint who talked investors into bankrolling his drawing-board vision of an energy and logistics empire. Batista rose to be the world's seventh-wealthiest man, claimed 2 million followers on Twitter and then tumbled to Earth when his oil wells turned out to be duds. He is now fighting serial lawsuits against angry creditors and has seen his assets literally towed away.
While Batista was helicoptering prospective investors and journalists out to the empty building yard that was to be Latin America's biggest superport, Lemann was quietly creating wealth, carefully planning his moves on high-profile targets in the U.S. and Europe.
Alongside longtime partners Beto Sicupira and Marcel Telles, also from Brazil, Lemann orchestrated takeovers of some of the biggest names in the food and beverage business. In 2008, he bought out Anheuser-Busch, then swallowed Burger King and Canadian breakfast chain Tim Hortons.
Lemann's team whetted their appetites at home, in the wild 1980s and 1990s, when inflation was raging and strafing some of Brazil's best known brands. Piloting Brazil's first private equity business, Lemann's team scooped up struggling retailers, including nationally-known beverage makers Brahma and Antarctica, which had envious market shares but leaky busy plans. The result was Ambev, South America's biggest beverage business.
From Brazil, he pivoted to Europe, merging Ambev with Belgium's Interbrew, which owned boutique label Stella Artois. But what looked at first like a Belgian takeover of a weak Latin sister turned out to be just the opposite. Soon Brazilian managers were calling the shots in Leuven, investment banker Antoine von Agtmael once told me. The conglomerate AB Inbev is now the world's largest brewer. From there he caught Buffett's eye and made the jump to the U.S.
That a trio of Cariocas, as Rio natives are known, were behind such brazen ventures came as something of a shock for many in the business world, not least Lemann's targets. "Here were these Brazilians, and their culture of samba and laid-back lifestyle, moving in on world class assets," says Sergio Lazzarini, who teaches business administration at the Sao Paulo university Insper. "They were easy to underestimate."
Lemann's business model -- based on meritocracy and productivity targets -- was as simple as it was exacting. Cost-cutting and streamlining were not the goals but the consequence. In Brazil, where inefficient, family-owned enterprise is dominant, "Lemann's obsession with results is the exception," Lazzarini said.
In early 2013, for example, Heinz had a squishy bottom line and 31,900 employees. By last December, under 3G management, the company had shed nearly a quarter of its workforce, reducing annual costs by about $80 million.
An accomplished athlete, Lemann might not have become a corporate raider at all. Born in Rio de Janeiro to Swiss parents, he was an avid surfer, practiced underwater fishing and played professional tennis, once reaching Wimbledon, but finally settled on the much bigger game of creating wealth. "Business, business, business. That's Jorge Paulo, 12, 16 hours a day," Teixeira da Costa said about his friend. Teixeira may have lost time with a drinking buddy, but Brazil gained a tournament-class mogul.
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