Heinz to sell to Buffett, 3G Capital for 23 Billion

Warren Buffett's Berkshire Hathaway and private equity firm 3G Capital will buy ketchup and baby food maker H.J. Heinz Co for $23.2 billion in cash, a deal that combines 3G's ambitions in the food industry with Buffett's hunt for growth.

Including debt assumption, Heinz valued the transaction, which it called the largest in its industry's history, at $28 billion. Berkshire and 3G will pay $72.50 per share, a 19 percent premium to the stock's previous all-time high.

Heinz shares actually rose slightly above the offer price, although Buffett cautioned he had no intention of raising his bid.

Analysts said the deal could be the first step in a broader wave of mergers for the food and beverage industry.

"Maybe for the consumer staples group in general this may start some talk about consolidation. Even corporate entities are flush with cash, interest rates are low, it would seemingly make sense,"Edward Jones analyst Jack Russo said.

Companies like General Mills and Campbell Soup - itself long seen as a potential Heinz merge partner - rose on the news.

The company, known for its iconic ketchup bottles, Heinz 57 sauces as well as other brands including Ore-Ida frozen potatoes, has increased net sales for the last eight fiscal years in a row.