Heinz Said to Market Bonds in Europe to Help Fund Kraft Takeover

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Heinz Said to Market Bonds in Europe to Help Fund Kraft Takeover

Heinz is selling bonds in euros and pounds for the first time in at least 14 years to help finance its takeover of Kraft Foods Group, hours after completing a $10 billion debt sale in the US.

The ketchup maker backed by Warren Buffett’s Berkshire Hathaway and Jorge Paulo Lemann's 3G Capital, is offering at least €500 million euros of notes and at least £300 million of securities, according to a person familiar with the matter, who asked not to be identified because they’re not authorised to speak publicly.

Heinz is raising funds to help finance the buyout of Kraft, which would create the third-largest foodand beverage company in North America encompassing household products from Philadelphia cheese to baked beans. It’s the latest US company to seek funding in euros, where borrowing costs for investment- grade firms are about two percentage points cheaper than in the US.

The company will use proceeds from today’s sale to repay a term loan, redeem 2020 notes and pay down a revolving-credit facility held by Kraft, the person familiar with the matter said. The euro-denominated debt is due in eight years and will pay a yield premium of 135 basis points to 140 basis points above benchmarks, according to the person. The pound bonds will mature in 12 years and pay 195 basis points to 200 basis points, the person said.

It last sold euro bonds in March 2001 and pound debt in February 2000.


The average yield spread over benchmarks that investors demand to hold investment-grade debt in euros is 80 basis points, according to Bank of America Merrill Lynch index data.

Officials at the Pittsburgh, Pennsylvania-based company couldn’t be reached outside office hours for comment.

News by Bloomberg, edited by ESM

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