PREM14A 1 d491866dprem14a.htm PRELIMINARY SPECIAL NOTICE & PROXY STATEMENT <![CDATA[Preliminary Special Notice & Proxy Statement]]>
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant x

Filed by a Party other than the Registrant ¨

Check the appropriate box:

 

x Preliminary Proxy Statement

 

¨ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

¨ Definitive Proxy Statement

 

¨ Definitive Additional Materials

 

¨ Soliciting Material Pursuant to §240.14a-12

H. J. HEINZ COMPANY

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

¨ No fee required.

 

x Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11

 

  (1) Title of each class of securities to which transaction applies:

 

           Common stock, par value $0.25 per share

 

  (2) Aggregate number of securities to which transaction applies:

329,787,479 shares of common stock, which consists of: (i) 320,959,712 shares of common stock issued and outstanding as of February 27, 2013, (ii) 86,805 shares of common stock issuable upon the conversion of third cumulative preferred stock, $1.70 first series, as of February 27, 2013, (iii) 6,713,956 shares of common stock issuable upon the exercise of options to purchase shares of common stock outstanding as of February 27, 2013 and (iv) 2,027,006 shares of common stock subject to restricted share units and phantom shares as of February 27, 2013.

 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

In accordance with Section 14(g) of the Securities Exchange Act of 1934, as amended, the filing fee was determined by multiplying 0.00013640 by the underlying value of the transaction of $23,575,707,195.62, which has been calculated as the sum of: (a) the product of (i) 320,959,712 issued and outstanding shares of common stock as of February 27, 2013 and (ii) the merger consideration of $72.50 per share; plus (b) the product of (i) 86,805 shares of common stock issuable upon the conversion of third cumulative preferred stock, $1.70 first series, as of February 27, 2013 and (ii) the merger consideration of $72.50 per share; plus (c) the product of (i) 6,713,956 shares of common stock issuable upon the exercise of options to purchase shares of common stock outstanding as of February 27, 2013 and (ii) $22.77 per share (the difference between $72.50 per share and the weighted-average exercise price of such options of $49.73 per share); plus (d) the product of (i) 2,027,006 shares of common stock subject to restricted share units and phantom shares as of February 27, 2013 and (ii) the merger consideration of $72.50 per share.

 

  (4) Proposed maximum aggregate value of transaction:

 

           $23,575,707,195.62

 

  (5) Total fee paid:

 

           $3,215,726.46

 

 

¨ Fee paid previously with preliminary materials.

 

¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:

 

  (2) Form, Schedule or Registration Statement No.:

 

  (3) Filing Party:

 

  (4) Date Filed:

 

 

 

 


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LOGO

H. J. Heinz Company

World Headquarters

One PPG Place, Suite 3100

Pittsburgh, Pennsylvania 15222

[], 2013

Dear Heinz Shareholder:

As of February 13, 2013, H. J. Heinz Company (“Heinz”) entered into a definitive merger agreement, subsequently amended as of March 4, 2013, to be acquired by an investment consortium comprised of Berkshire Hathaway Inc. and an investment fund affiliated with 3G Capital Partners Ltd. Pursuant to the terms of the merger agreement, a wholly owned subsidiary of Hawk Acquisition Holding Corporation (“Parent”), an entity formed by Berkshire Hathaway Inc. and 3G Capital Partners Ltd. for the sole purpose of effecting the acquisition, will be merged with and into Heinz, with Heinz surviving the merger as a wholly owned subsidiary of Parent.

If the merger is completed, Heinz shareholders will have the right to receive $72.50 in cash, without interest and less any applicable withholding taxes, for each share of common stock, par value $0.25 per share, of Heinz that they own immediately prior to the effective time of the merger.

We will hold a special meeting of our shareholders in connection with the proposed merger on [], 2013 at [] a.m., local time (unless the special meeting is adjourned or postponed). At the special meeting, shareholders will be asked to vote on the proposal to approve and adopt the merger agreement. The affirmative vote of a majority of the votes cast by all Heinz shareholders entitled to vote at the special meeting is required to approve and adopt the merger agreement.

We cannot complete the merger unless Heinz shareholders approve and adopt the merger agreement. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting in person, please vote or otherwise submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.

The Heinz board of directors has unanimously approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. After careful consideration, the Heinz board of directors unanimously recommends that Heinz shareholders vote “FOR” the proposal to approve and adopt the merger agreement.

In addition, the Securities and Exchange Commission has adopted rules that require us to seek a non-binding, advisory vote with respect to certain payments that will or may be made to Heinz’s named executive officers by Heinz based on or otherwise relating to the merger. The Heinz board of directors unanimously recommends that Heinz shareholders vote “FOR” the named executive officer merger-related compensation proposal described in the accompanying proxy statement.

The obligations of Heinz and Parent to complete the merger are subject to the satisfaction or waiver of certain conditions. The accompanying proxy statement contains detailed information about Heinz, the special meeting, the merger agreement, the merger and the other transactions contemplated by the merger agreement.

Thank you for your confidence in Heinz.

 

Sincerely,

William R. Johnson

Chairman of the Board, President and

Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger, passed upon the merits of the merger agreement, the merger or the other transactions contemplated by the merger agreement or determined if the accompanying proxy statement is accurate or complete. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [], 2013 and, together with the enclosed form of proxy, is first being mailed to Heinz shareholders on or about [], 2013.


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LOGO

H. J. Heinz Company

World Headquarters

One PPG Place, Suite 3100

Pittsburgh, Pennsylvania 15222

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

 

DATE & TIME

   [], [], 2013 at [] a.m., Eastern Time

PLACE

   [], New York, New York [].

ITEMS OF BUSINESS

  

•     Consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger, dated as of February 13, 2013, by and among H. J. Heinz Company (“Heinz”), Hawk Acquisition Holding Corporation (“Parent”) and Hawk Acquisition Sub, Inc., a wholly owned subsidiary of Parent (“Merger Sub”), as amended by the Amendment to Agreement and Plan of Merger dated as of March 4, 2013, and as may be further amended from time to time (the “merger agreement”), a copy of which is included as Annex A-1 and Annex A-2 to the proxy statement of which this notice forms a part, and pursuant to which Merger Sub will be merged with and into Heinz, with Heinz surviving the merger as a wholly owned subsidiary of Parent (the “merger”);

 

•     Approve an adjournment of the special meeting of shareholders of Heinz (the “special meeting”), if necessary, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and

 

•     Consider and vote on a proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger.

RECORD DATE

   Shareholders of record at the close of business on [], 2013 may vote at the special meeting.

VOTING BY PROXY

   The Heinz Board is soliciting your proxy to assure that a quorum is present and that your shares are represented and voted at the special meeting. For information on submitting your proxy over the internet, by telephone or by mailing back the traditional proxy card (no extra postage is needed for the provided envelope if mailed in the U.S.), please see the attached proxy statement and enclosed proxy card. If you later decide to vote at the special meeting, information on revoking your proxy prior to the special meeting is also provided.

RECOMMENDATIONS

  

The Heinz Board unanimously recommends that you vote:

 

•     “FOR” the proposal to approve and adopt the merger agreement;

 

•     “FOR” the adjournment proposal; and

 

•     “FOR” the named executive officer merger-related compensation proposal.

YOUR VOTE IS VERY IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN PERSON, PLEASE VOTE OVER THE INTERNET OR BY TELEPHONE PURSUANT TO THE INSTRUCTIONS CONTAINED IN THESE MATERIALS OR COMPLETE, DATE, SIGN AND RETURN A PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU ATTEND THE SPECIAL MEETING AND WISH TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS EXERCISED.


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Your proxy may be revoked at any time before the vote at the special meeting by following the procedures outlined in the accompanying proxy statement.

Please note that we intend to limit attendance at the special meeting to shareholders as of the record date (or their authorized representatives). If your shares are held by a broker, bank or other nominee, please bring to the special meeting your account statement evidencing your beneficial ownership of Heinz common stock as of the record date. All shareholders should also bring photo identification.

The proxy statement of which this notice forms a part provides a detailed description of the merger agreement, the merger and the other transactions contemplated by the merger agreement. We urge you to read the proxy statement, including any documents incorporated by reference, and its annexes carefully and in their entirety. If you have any questions concerning the merger or the proxy statement, would like additional copies of the proxy statement or need help voting your shares of Heinz common stock, please contact Heinz’s proxy solicitor:

 

LOGO

105 Madison Avenue

New York, New York 10016

Call Toll-Free: (800) 322-2885

 

By Order of the Board of Directors of H. J. Heinz Company,

Theodore N. Bobby

Executive Vice President, General Counsel and

Corporate Secretary

Pittsburgh, Pennsylvania

[], 2013


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TABLE OF CONTENTS

 

         Page      

Summary

     1   

Questions and Answers

     18   

Caution Regarding Forward-Looking Statements

     26   

The Companies

     27   

The Special Meeting

     29   

The Merger (Proposal 1)

     34   

Effects of the Merger

     34   

Effects on Heinz if the Merger is Not Completed

     34   

Background of the Merger

     35   

Heinz’s Reasons for the Merger

     47   

Recommendation of the Heinz Board of Directors

     51   

Opinions of Heinz’s Financial Advisors

     52   

Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board

     66   

Certain Financial Projections

     73   

Interests of Heinz’s Directors and Executive Officers in the Merger

     78   

Financing of the Merger

     89   

Regulatory Clearances and Approvals Required for the Merger

     91   

Material U.S. Federal Income Tax Consequences of the Merger

     91   

Delisting and Deregistration of Heinz Common Stock

     92   

Litigation Related to the Merger

     92   

Dissenters’ Rights

     92   

The Merger Agreement

     93   

Structure of the Merger

     93   

Closing and Effective Time of the Merger

     93   

Marketing Period

     94   

Effect of the Merger on Heinz’s Stock

     95   

Procedures for Surrendering Shares for Payment

     95   

Withholding

     96   

Treatment of Heinz Equity-Based Awards

     96   

Representations and Warranties

     97   

Definition of “Material Adverse Effect”

     99   

Conduct of the Business Pending the Merger

     100   

Board Obligation to Call a Shareholders’ Meeting

     102   

Non-Solicitation Covenant

     102   

Changes in Board Recommendation

     104   

Required Efforts to Consummate the Merger

     106   

Litigation Related to the Merger

     107   

Employee Benefits Matters

     107   

Directors’ and Officers’ Indemnification and Insurance

     108   

Takeover Provisions

     109   

Delisting and Deregistration of Heinz Common Stock

     109   

Maintenance of Name, Headquarters, Civic and Charitable Activities

     109   

Financing

     109   

Debt Tender Offers and Redemptions

     112   

Repatriation of Cash

     112   

Redemption of First Series Preferred Shares

     112   

Other Covenants

     112   

Conditions to the Completion of the Merger

     113   

Termination of the Merger Agreement

     114   

 

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         Page      

Termination Fee Payable by Heinz

     116   

Termination Fee Payable by Parent

     117   

Remedies

     117   

Specific Performance

     118   

Fees and Expenses

     118   

Amendments, Waivers

     119   

Governing Law and Venue, Waiver of Jury Trial

     119   

Amendment to Agreement and Plan of Merger

     119   

Vote on Adjournment (Proposal 2)

     120   

Market Prices of Heinz Common Stock

     121   

Security Ownership of Certain Beneficial Owners and Management

     122   

Advisory Vote on Named Executive Officer Merger-Related Compensation Arrangements (Proposal 3)

     124   

Material U.S. Federal Income Tax Consequences of the Merger

     125   

U.S. Holders

     125   

Non-U.S. Holders

     126   

Information Reporting and Backup Withholding

     126   

Future Heinz Shareholder Proposals

     128   

Multiple Shareholders Sharing One Address

     128   

Where You Can Find More Information

     129   

Annex A-1—Agreement and Plan of Merger

     A-1-1   

Annex A-2—Amendment to Agreement and Plan of Merger

     A-2-1   

Annex B—Opinion of Centerview Partners LLC

     B-1   

Annex C—Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated

     C-1   

Annex D—Opinion of Moelis & Company LLC

     D-1   

 

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SUMMARY

This summary highlights information contained elsewhere in this proxy statement and may not contain all the information that is important to you with respect to the merger. We urge you to read carefully the remainder of this proxy statement, including the attached annexes, and the other documents to which we have referred you. For additional information on Heinz included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement. We have included page references in this summary to direct you to a more complete description of the topics presented below.

All references to “Heinz”, “we”, “us”, or “our” in this proxy statement refer to H. J. Heinz Company, a Pennsylvania corporation; all references to “Parent” refer to Hawk Acquisition Holding Corporation, a Delaware corporation; all references to “Merger Sub” refer to Hawk Acquisition Sub, Inc., a Pennsylvania corporation and a wholly owned subsidiary of Parent formed for the sole purpose of effecting the merger; all references to Berkshire Hathaway refer to Berkshire Hathaway, Inc., a Delaware corporation; all references to 3G Capital refer to 3G Special Situations Fund III, L.P., a Cayman exempted limited partnership, or 3G Capital Partners Ltd., a Cayman exempted limited company, as the context requires; all references to the “Investors” refer to Berkshire Hathaway and 3G Capital; all references to “Heinz common stock” refer to the common stock, par value $0.25 per share, of Heinz; all references to the “Heinz Board” refer to the board of directors of Heinz; all references to the “merger” refer to the merger of Merger Sub with and into Heinz with Heinz surviving as a wholly owned subsidiary of Parent; and, unless otherwise indicated or as the context requires, all references to the “merger agreement” refer to the Agreement and Plan of Merger, dated as of February 13, 2013, as amended by the Amendment to Agreement and Plan of Merger dated as of March 4, 2013, and as may be further amended from time to time, by and among Heinz, Parent and Merger Sub, a copy of which is included as Annex A-1 and Annex A-2 to this proxy statement. Heinz, following the completion of the merger, is sometimes referred to in this proxy statement as the “surviving corporation.”

The Companies

H. J. Heinz Company (see page [])

H. J. Heinz Company and its subsidiaries manufacture and market an extensive line of food products throughout the world. Heinz’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products. Heinz’s products are manufactured and packaged to provide safe, wholesome foods for consumers, as well as foodservice and institutional customers. Many products are prepared from recipes developed in Heinz’s innovation and research centers. Ingredients are carefully selected, inspected and passed on to factory kitchens where they are processed, after which the intermediate product is filled automatically into containers of glass, metal, plastic, paper or fiberboard, which are then sealed. Products are prepared by sterilization, blending, fermentation, pasteurization, homogenization, chilling, freezing, pickling, drying, freeze drying, baking or extruding, then labeled and cased for market.

Shares of Heinz common stock are listed with, and trade on, the New York Stock Exchange (the “NYSE”) under the symbol “HNZ”.

Heinz was incorporated in Pennsylvania on July 27, 1900. In 1905, it succeeded to the business of a partnership operating under the same name which had developed from a food business founded in 1869 in Sharpsburg, Pennsylvania by Henry J. Heinz. Our principal executive offices are maintained at One PPG Place, Pittsburgh, Pennsylvania 15222, and the telephone number at that address is (412) 456-5700. Our corporate website address is www.heinz.com. The information provided on the Heinz website is not part of this proxy statement and is not incorporated in this proxy statement by reference or any other reference to its website provided in this proxy statement.

 

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Hawk Acquisition Holding Corporation (see page [])

Hawk Acquisition Holding Corporation, or Parent, is a Delaware corporation that was formed solely for the purpose of acquiring Heinz and has not engaged in any business except for activities related to its formation, completing the transactions contemplated by the merger agreement and arranging the related financing. Parent is controlled by Berkshire Hathaway and 3G Capital. Berkshire Hathaway and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Berkshire Hathaway common stock is listed on the NYSE under the trading symbols BRK.A and BRK.B. 3G Special Situations Fund III, L.P., an affiliate of 3G Capital Partners Ltd., is a private equity fund principally engaged in the business of making investments in securities. 3G Capital is a global investment firm focused on long-term value, with a particular emphasis on maximizing the potential of brands and businesses. The firm and its partners have a strong history of generating value through operational excellence, board involvement, deep sector expertise and an extensive global network. Among other investments, an investment fund affiliated with 3G Capital is the majority stockholder of Burger King Worldwide, Inc., a customer of Heinz in the ordinary course of business. Upon completion of the merger, Heinz will be a wholly owned subsidiary of Parent.

Hawk Acquisition Sub, Inc. (see page [])

Hawk Acquisition Sub, Inc., or Merger Sub, is a Pennsylvania corporation and a wholly owned subsidiary of Parent that was formed by Parent solely for the purpose of facilitating the acquisition of Heinz. To date, Merger Sub has not carried on any activities other than those related to its formation, completing the transactions contemplated by the merger agreement and arranging the related financing. Upon completion of the merger, Merger Sub will cease to exist as a separate entity.

The Merger

A copy of the merger agreement is attached as Annex A-1 and Annex A-2 to this proxy statement. We encourage you to read the entire merger agreement carefully because it is the principal document governing the merger. For more information on the merger agreement, see the section entitled “The Merger Agreement” beginning on page [] of this proxy statement.

Structure of the Merger (see page [])

If the merger is completed, then, at the effective time of the merger, Merger Sub will be merged with and into Heinz. Heinz will survive the merger as a wholly owned subsidiary of Parent.

Merger Consideration (see page [])

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger, Heinz shareholders will have the right to receive $72.50 in cash, without interest and less any applicable withholding taxes, for each share of Heinz common stock that they own immediately prior to the effective time of the merger.

Dividends (see page [])

Until the effective time of the merger, the merger agreement permits Heinz, and Heinz expects, to continue to declare and pay regular quarterly cash dividends not to exceed $0.515 per share of Heinz common stock with record dates and payment dates that are substantially consistent with Heinz’s past practice. However, future cash dividends, if any, will be at the discretion of the Heinz Board and can be changed or discontinued at any time. If, at the effective time of the merger, there are any declared and unpaid dividends with a record date prior to the

 

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effective time, then holders of Heinz common stock as of that record date will have the right to receive those dividends in addition to any merger consideration. The merger agreement does not permit Heinz, and Heinz does not expect, to pay a prorated dividend for the quarter in which the merger is completed. Any dividends paid will not be paid by the paying agent for the merger.

Treatment of Heinz Equity-Based Awards (see page [])

The merger agreement provides that outstanding equity-based awards granted under Heinz’s equity plans will be treated as follows at the effective time of the merger:

Stock Options. At the effective time of the merger, each outstanding option to purchase shares of Heinz common stock, whether vested or unvested, will be cancelled, and the holder will be entitled to receive, within three business days of the effective time of the merger, an amount in cash equal to the product of the total number of shares of common stock subject to such option multiplied by the excess, if any, of the merger consideration of $72.50 per share over the exercise price of such option, without interest and less any applicable withholding taxes.

Heinz Phantom Shares. At the effective time of the merger, each outstanding phantom share relating to Heinz common stock, whether vested or unvested, will be cancelled, and the holder will be entitled to receive, within three business days of the effective time of the merger, an amount in cash equal to the merger consideration of $72.50 per share, without interest and less any applicable withholding taxes.

Restricted Stock Units. At the effective time of the merger, each outstanding restricted stock unit (“RSU”), other than certain RSUs, relating to Heinz common stock, whether vested or unvested, will be cancelled, and the holder will be entitled to receive, within three business days of the effective time of the merger, an amount in cash equal to the sum of (i) the product of $72.50 multiplied by the total number of shares of common stock subject to such RSU plus (ii) the amount of accrued and unpaid dividends thereon, without interest and less any applicable withholding taxes. Payment in respect of RSUs that have been deferred will be made in accordance with the terms of the applicable award and the applicable deferral election made by the holder. Payment in respect of retention RSUs, or portions thereof, that vest in accordance with the terms of the applicable award will be made in accordance with such terms in an amount as determined above. In the event that the immediate payment of the amounts contemplated above in respect of an RSU would cause an impermissible acceleration event under Section 409A of the Code, such amounts will become vested at the effective time of the merger agreement and will be paid at the earliest time such payment would not cause an impermissible acceleration event under Section 409A.

Global Stock Purchase Plan. Heinz’s Global Stock Purchase Plan (the “GSPP”) was terminated immediately following the scheduled plan purchases on the February 15, 2013 purchase date for the purchase period ending on such date, and all accumulated payroll deductions held for subsequent purchase periods were returned to GSPP participants.

Recommendation of the Heinz Board of Directors (see page [])

After careful consideration, the Heinz Board unanimously approved the merger agreement, the merger, and the other transactions contemplated by the merger agreement. Certain factors considered by the Heinz Board in reaching its decision to authorize and adopt the merger agreement, the merger, and the other transactions contemplated by the merger agreement can be found in the section entitled “The Merger—Heinz’s Reasons for the Merger” beginning on page [] of this proxy statement. The Heinz Board unanimously recommends that shareholders vote:

 

   

“FORthe proposal to approve and adopt the merger agreement at the special meeting;

 

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“FOR” the proposal to adjourn the special meeting, if necessary, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement (the “adjournment proposal”); and

 

   

“FOR” the proposal to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger (the “named executive officer merger-related compensation proposal”).

Opinions of Heinz’s Financial Advisors (see page [])

Opinion of Centerview

Centerview Partners LLC (“Centerview”), Heinz’s financial advisor, delivered to the Heinz Board its oral opinion, subsequently confirmed in a written opinion dated February 13, 2013, to the effect that, as of the date of the opinion, based upon and subject to the various assumptions and limitations set forth in the written opinion, the per share merger consideration to be paid to the holders of the outstanding shares of Heinz common stock (other than “excluded shares”, as defined in the merger agreement) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of the written opinion of Centerview, dated February 13, 2013, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Centerview in connection with its opinion, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety. Centerview provided its opinion for the information and assistance of the Heinz Board (in the Heinz Board’s capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction. Centerview’s opinion does not address any other term or aspect of the merger agreement or the transaction and does not constitute a recommendation to any shareholder of Heinz as to how any such holder or any other person should vote with respect to the merger or otherwise act with respect to the transaction or any other matter. We encourage you to carefully read the written opinion of Centerview described above in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Centerview in connection with its opinion.

Opinion of BofA Merrill Lynch

In connection with the merger, Merrill Lynch, Pierce, Fenner & Smith Incorporated (“BofA Merrill Lynch”), Heinz’s financial advisor, delivered to the Heinz Board a written opinion, dated February 13, 2013, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the merger consideration to be received by holders of Heinz common stock was fair, from financial point of view, to such holders. The full text of the written opinion, dated February 13, 2013, of BofA Merrill Lynch, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex C to this proxy statement and is incorporated by reference herein in its entirety.

Heinz shareholders are urged to read the opinion of BofA Merrill Lynch carefully and in its entirety. BofA Merrill Lynch provided its opinion to the Heinz Board (in its capacity as such) for the benefit and use of the Heinz Board in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Heinz or in which Heinz might engage or as to the underlying business decision of Heinz to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any shareholder as to how to vote or act in connection with the proposed merger or any related matter.

 

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Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board (see page [])

In connection with the merger, the Transaction Committee of the Heinz Board (the “Transaction Committee”) received a written opinion, dated February 13, 2013, from the Transaction Committee’s financial advisor, Moelis & Company LLC (“Moelis”), to the effect that, as of the date of the opinion and based upon and subject to the conditions and limitations set forth in the opinion, the merger consideration to be received in the merger by holders of Heinz common stock was fair, from a financial point of view, to such holders.

The full text of Moelis’ written opinion, dated February 13, 2013, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D to this proxy statement. Shareholders are urged to read Moelis’ written opinion carefully and in its entirety. Moelis’ opinion was provided for the use and benefit of the Transaction Committee and the Heinz Board (in their respective capacities as such) in their evaluation of the merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the merger consideration to the holders of Heinz common stock, and does not address Heinz’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available with respect to Heinz. Moelis’ opinion does not constitute a recommendation to any shareholder of Heinz as to how such shareholder should vote or act with respect to the merger or any other matter.

Maintenance of Name, Headquarters, Civic and Charitable Activities

Headquarters. The parties have agreed that from and after the closing, Heinz’s current headquarters in Pittsburgh, Pennsylvania will be the surviving corporation’s headquarters and the global home of the flagship “Heinz” brand.

Name of Parent. The parties have agreed that from and after the closing, the surviving corporation will be named H. J. Heinz Company.

Preservation of Company Heritage. The parties have agreed that from and after the closing, Parent will cause the surviving corporation to preserve Heinz’s heritage and continue to support philanthropic and charitable causes in Pittsburgh and other communities in which Heinz operates in a manner and amount consistent with past practice.

Stadium. Parent has agreed to cause the surviving corporation to honor its obligations under the naming rights and promotions agreement relating to Heinz Field.

Financing of the Merger (see page [])

We anticipate that the total funds needed to complete the merger, including the funds needed to:

 

   

pay our shareholders (and holders of our other equity-based interests) the amounts due to them under the merger agreement and pay related expenses, which would be approximately $[] billion based upon the shares (and our other equity-based interests) outstanding as of [], 2013; and

 

   

repay certain indebtedness of Heinz at the closing of the merger, which, as of [], 2013, was approximately $[] billion (with the remaining indebtedness rolling over into indebtedness of the surviving corporation);

 

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will be funded through a combination of:

 

   

$4.12 billion in common equity contributed by 3G Capital;

 

   

$12.12 billion in equity contributed by Berkshire Hathaway, composed of $4.12 billion in common equity and $8 billion in preferred equity with warrants;

 

   

$10.5 billion in term loans under the senior secured credit facilities (along with a $1.5 billion revolving credit facility that will not be drawn to fund the merger); and

 

   

the issuance of up to $2.1 billion aggregate principal amount of senior secured second lien notes (or, to the extent such notes are not issued at or prior to the closing of the merger, by a senior secured second lien bridge loan facility of up to $2.1 billion less the amount of any notes issued).

If the merger agreement is terminated in the circumstance in which the merger is not completed because Merger Sub does not receive the proceeds of the debt financing commitments, Parent will be obligated to pay Heinz a reverse termination fee of $1.4 billion. The obligation of Parent to pay the reverse termination fee is guaranteed by 3G Capital and Berkshire Hathaway as discussed below.

Equity Financing

Parent has entered into letter agreements with each of Berkshire Hathaway and 3G Capital dated February 13, 2013, pursuant to which Berkshire Hathaway has committed to purchase, or cause the purchase of, equity interests in Parent simultaneously with the closing of the merger up to a maximum of $12.12 billion and 3G Capital has committed to purchase, or cause the purchase of, equity interests in Parent simultaneously with the closing of the merger up to a maximum of $4.12 billion, in each case to fund a portion of the merger consideration together with related fees and expenses.

Berkshire Hathaway’s and 3G Capital’s respective obligations under the equity commitment letters are subject to the satisfaction of the conditions to Parent’s and Merger Sub’s obligations to consummate the transaction contemplated by the merger agreement, the funding of the debt financing pursuant to the terms and conditions of the debt commitment letter or any alternative financing that Parent and Merger Sub are required or permitted to accept from alternate sources pursuant to the merger agreement and the contemporaneous funding by the other Investor.

Debt Financing

Merger Sub has received a debt commitment letter (the “debt commitment letter”), from JPMorgan Chase Bank, N.A. (“JPMCB”), J.P. Morgan Securities LLC (“J.P. Morgan”), Wells Fargo Bank, National Association (“Wells Fargo”), WF Investment Holdings, LLC (“WF Investment”), and Well Fargo Securities LLC (“WF Securities”), Barclays Capital Inc. (“Barclays”) and Citigroup Global Markets Inc. (“Citi” and, together with JPMCB, J.P. Morgan, Wells Fargo, WF Investment and Barclays , the “arrangers”), to provide the following to Merger Sub, subject to the conditions set forth in the debt commitment letter:

 

   

up to $12.0 billion of senior secured facilities (not all of which is expected to be drawn at the closing of such facilities) for the purpose of financing the merger, refinancing certain existing indebtedness of Heinz, paying fees and expenses incurred in connection with the merger agreement, the merger and the other transactions contemplated by the merger agreement and for providing ongoing working capital and for other general corporate purposes of Heinz and its subsidiaries; and

 

   

to the extent the senior secured notes are not issued, up to $2.1 billion of secured second lien bridge facilities for the purpose of financing the merger, refinancing certain existing indebtedness of Heinz and paying fees and expenses incurred in connection with the merger agreement, the merger and the other transactions contemplated by the merger agreement.

It is expected that at or prior to the closing of the merger, $2.1 billion principal amount of senior secured second lien notes will be issued pursuant to Rule 144A under the Securities Act of 1933, as amended, in lieu of the bridge loans, and with registration rights for the holders of such notes.

 

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Subject to market conditions, Merger Sub may complete its issuance of senior secured second lien notes prior to the closing of the merger. In such event, the proceeds will be held in escrow until the date that the conditions set forth in the escrow agreement are satisfied. At the same time, it is expected that Merger Sub would deposit funds in the segregated escrow account sufficient to pay for any escrow fees and interest on the notes up to an outside date to be determined. It is expected that the escrow release would be subject to customary terms and conditions including that the closing of the merger shall have been consummated concurrently with the release of funds from escrow. In the event that the conditions to escrow release are not satisfied, including that the merger is not consummated, the senior secured second lien notes would be subject to a special mandatory redemption.

The commitment of the arrangers with respect to the senior secured facilities and the bridge facility expires upon the earliest to occur of (i) the termination of the merger agreement in accordance with its terms prior to the closing of the merger and the related transactions, (ii) the consummation of the merger with or without the funding of the senior secured facilities and the bridge facility and (iii) November 13, 2013. The documentation governing the debt financings has not been finalized and, accordingly, the actual terms of the debt financing may differ from those described in this document. Parent has agreed to use its reasonable best efforts to arrange the debt financing on the terms and conditions described in the debt commitment letter. If any portion of the debt financing becomes unavailable on the terms and conditions contemplated in the debt commitment letter, Parent and Merger Sub must use their reasonable best efforts to arrange and obtain alternative financing from alternative sources in an amount sufficient to consummate the transactions contemplated by the merger agreement on terms that are not less favorable to Heinz or Parent (in the reasonable judgment of Parent) than as contemplated by the debt commitment letter.

Although the debt financing described in this document is not subject to a due diligence or “market out,” such financing may not be considered assured. The obligation of the arrangers to provide debt financing under the debt commitment letter is subject to a number of conditions. There is a risk that these conditions will not be satisfied and the debt financing may not be funded when required. As of the date of this proxy statement, no alternative financing arrangements or alternative financing plans have been made in the event the debt financing described in this proxy statement is not available.

Limited Guaranties

Pursuant to limited guaranties delivered by each of Berkshire Hathaway and 3G Capital in favor of Heinz, dated February 13, 2013, Berkshire Hathaway and 3G Capital have each agreed to guarantee 50% of the payment obligations of Parent and Merger Sub under the merger agreement, including the payment obligations of each for 50% of the reverse termination fee of $1.4 billion, if, as and when due, provided, however, that in no event will the liability of either Berkshire Hathaway or 3G Capital pursuant to its limited guaranty exceed $700 million.

Material U.S. Federal Income Tax Consequences of the Merger (see page [])

The exchange of Heinz common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [] of this proxy statement and consult your tax advisers regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

Regulatory Clearances and Approvals Required for the Merger (see page [])

HSR Act and U.S. Antitrust Matters. The merger is subject to the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), which prevents Heinz and Parent from completing the merger until required information and materials are furnished to the Antitrust Division of the Department of Justice (the “DOJ”) and the Federal Trade Commission (the “FTC”) and the HSR Act waiting period is terminated or expires. On February 28, 2013, Heinz, Berkshire Hathaway and 3G Capital filed the

 

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requisite notification and report forms under the HSR Act with the DOJ and the FTC, which triggered the start of the HSR Act waiting period. The DOJ, the FTC, state attorneys general and others may challenge the merger on antitrust grounds either before or after expiration or termination of the HSR Act waiting period. Accordingly, at any time before or after the completion of the merger, any of the DOJ, the FTC, state attorneys general or others could take action under the antitrust laws, including, without limitation, seeking to enjoin the completion of the merger. We cannot assure you that a challenge to the merger on antitrust grounds will not be made or that, if a challenge is made, it will not succeed.

Foreign Regulatory Clearances. The parties must also file merger notifications with the appropriate regulators in the European Union, China, Russia, Brazil, India, South Africa, South Korea, Israel, Mexico and Ukraine (together with any other jurisdictions mutually agreed in good faith by the parties to be required, the “required foreign jurisdictions”) pursuant to each jurisdiction’s respective laws, designed or intended to regulate actions having the purpose or effect of monopolization or restraint of trade or lessening of competition through merger or acquisition. The parties must also observe mandatory waiting periods and/or obtain the necessary approvals, clearances or consents in each of the required foreign jurisdictions before completing the merger. The parties will file merger notifications with the appropriate regulators in each of the required foreign jurisdictions as promptly as practicable and work cooperatively toward expedited regulatory clearances.

Foreign antitrust authorities in these or other jurisdictions may take action under the antitrust laws of their respective jurisdictions, which could include seeking to enjoin the completion of the merger. For more information about regulatory approvals relating to the merger, see the sections entitled “The Merger—Regulatory Clearances and Approvals Required for the Merger” beginning on page [] of this proxy statement and “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement.

Although we expect that all required regulatory clearances and approvals will be obtained, we cannot assure you that these regulatory clearances and approvals will be timely obtained or obtained at all or that the granting of these regulatory clearances and approvals will not involve the imposition of additional conditions on the completion of the merger, including the requirement to divest assets, or require changes to the terms of the merger agreement. These conditions or changes could result in the conditions to the merger not being satisfied.

Expected Timing of the Merger (see page [])

We expect to complete the merger late in the second calendar quarter of 2013 or in the third calendar quarter of 2013. The merger is subject to various regulatory clearances and approvals and other conditions, however, and it is possible that factors outside the control of Heinz or Parent could result in the merger being completed at a later time, or not at all. There may be a substantial amount of time between the special meeting and the completion of the merger. We expect to complete the merger promptly following the receipt of all required approvals and the expiration of a marketing period for the financing Parent is using to fund a portion of the consideration to be paid in the merger.

Conditions to Completion of the Merger (see page [])

As more fully described in this proxy statement and in the merger agreement, each party’s obligation to complete the merger depends on a number of conditions being satisfied, including:

 

   

approval and adoption of the merger agreement by a majority of the votes cast by the holders of Heinz common stock entitled to vote at the special meeting;

 

   

(i) expiration or termination of any waiting period (and any extension thereof) applicable to the merger under the HSR Act, (ii) the receipt of all required approvals by the European Commission applicable to the merger under applicable law or the expiration or termination of any applicable waiting period thereunder and (iii) the receipt of all required approvals under any antitrust laws applicable to the merger in the other required foreign jurisdictions or the expiration or termination of any applicable waiting period thereunder;

 

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the absence of (i) any order issued by any governmental entity of competent jurisdiction in a jurisdiction in which any of Heinz, Parent, 3G Capital, Berkshire Hathaway or any of the foregoing’s affiliates has substantial operations prohibiting consummation of the merger and (ii) any law by any governmental entity in such a jurisdiction that prohibits or makes illegal consummation of the merger;

 

   

the accuracy of representations and warranties made by the other party in the merger agreement (subject generally to a material adverse effect standard, with different standards applicable to certain representations and warranties); and

 

   

performance in all material respects by the other party of the agreements and covenants of such party in the merger agreement at or prior to the closing.

Restrictions on Solicitation of Alternative Proposals (see page [])

Subject to certain exceptions, the merger agreement provides that Heinz and its subsidiaries may not, must cause their respective directors and executive officers not to, and may not permit or authorize any of its or their respective officers, directors, employees, consultants, agents, financial advisors, attorneys, accountants, other advisors, affiliates and other representatives to, directly or indirectly:

 

   

solicit, seek, initiate or knowingly facilitate or encourage (including by way of furnishing non-public information) any inquiries regarding, or the making of, any submission or announcement of a proposal or offer that constitutes, or would reasonably be expected to lead to, any acquisition proposal;

 

   

engage in, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any other person any non-public information in connection with or for the purpose of encouraging or facilitating, any acquisition proposal;

 

   

approve, endorse or recommend any acquisition proposal; or

 

   

enter into any letter of intent, memorandum of understanding, acquisition agreement, merger agreement or other similar agreement (other than an acceptable confidentiality agreement) relating to any acquisition proposal.

Prior to approval and adoption of the merger agreement by Heinz shareholders, however, Heinz may, upon the terms and subject to the conditions set forth in the merger agreement, provide information to and engage in discussions or negotiations with a third party if such third party has made an unsolicited bona fide written acquisition proposal and the Heinz Board (or any committee thereof) determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal and that the failure to take such action would be reasonably likely to be inconsistent with the directors’ fiduciary duties under applicable law.

Changes in Board Recommendation (see page [])

Prior to approval and adoption of the merger agreement by Heinz shareholders, the Heinz Board may, upon receipt of a superior proposal, authorize Heinz to terminate the merger agreement in order to accept the superior proposal, subject to complying with certain notice and other specified conditions set forth in the merger agreement, including giving Parent the opportunity to make adjustments to the merger agreement in response to the superior proposal so that such proposal no longer constitutes a superior proposal. The Heinz Board may also change its recommendation that Heinz shareholders approve the merger agreement in certain other circumstances unrelated to a superior proposal. If the Heinz Board changes its recommendation with respect to the merger agreement, Parent may terminate the merger agreement and collect a termination fee of $750 million.

 

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Termination of the Merger Agreement (see page [])

The merger agreement may be terminated:

 

   

at any time prior to the effective time of the merger, by mutual written consent of Heinz and Parent;

 

   

at any time prior to the effective time of the merger, by either Heinz or Parent if:

 

   

the merger has not been consummated by November 13, 2013; provided that this termination right will not be available at any time after a closing failure notice (as described below) will have been given or to any party whose breach of any provision of the merger agreement results in the failure of the merger to be consummated by such time;

 

   

the meeting of Heinz shareholders to adopt the merger agreement has been held and the approval and adoption of the merger agreement by the shareholders has not been obtained upon a vote taken at such meeting or at any adjournment or postponement thereof; or

 

   

any order by a governmental entity of competent jurisdiction in a jurisdiction in which any of Heinz, Parent, 3G Capital, Berkshire Hathaway or any of the foregoing’s affiliates has substantial operations permanently restraining, enjoining or otherwise prohibiting consummation of the merger has become final and non-appealable; provided that this termination right will only be available to a party who has complied with its obligations described in the section entitled “The Merger Agreement—Required Efforts to Consummate the Merger” beginning on page [] of this proxy statement;

 

   

by Heinz:

 

   

at any time prior to the time the Heinz shareholder approval and adoption is obtained, in order to enter into an alternative acquisition agreement that constitutes a superior proposal, if such superior proposal did not result from a breach by Heinz of the covenants described in the section entitled “The Merger Agreement—Non-Solicitation Covenant” beginning on page [] of this proxy statement, and, immediately prior to or simultaneously with such termination, Heinz pays to Parent a termination fee of $750 million;

 

   

at any time prior to the effective time of the merger, if Parent or Merger Sub has breached any of its representations, warranties, covenants or agreements such that Heinz’s conditions to closing are not capable of being satisfied by November 13, 2013, and such breach or condition is not curable or, if curable, is not cured prior to the 30th day after written notice is given by Heinz to Parent; provided that this termination right is only available if Heinz is not in breach of the merger agreement such that certain of Parent’s conditions to closing are not capable of being satisfied by November 13, 2013; provided, further, that this termination right is not available due to the failure of Parent or Merger Sub to consummate the transactions contemplated by merger agreement on the date the closing should otherwise have occurred (in which case Heinz’s termination rights are described in the following bullet); or

 

   

at any time prior to the effective time of the merger, if all of Parent’s and Merger Sub’s conditions to closing have been satisfied (other than those conditions that by their nature are to be satisfied at the closing) and Parent and Merger Sub fail to consummate the merger on the date the closing should have occurred pursuant to the merger agreement; provided that termination may be delayed and ultimately not occur as described in “—Right to Delay Termination Fee Payable by Parent” beginning on page [] of this proxy statement.

 

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by Parent:

 

   

at any time prior to the time the shareholder approval and adoption of the merger agreement is obtained, if the Heinz Board has changed its recommendation in favor of the merger or the Heinz Board (or any committee thereof) has provided written notice of its intent to change its recommendation in favor of the merger; and

 

   

at any time prior to the effective time of the merger agreement, if Heinz has breached any of its representations, warranties, covenants or agreements such that Parent’s conditions to closing are not capable of being satisfied by November 13, 2013, and such breach or condition is not curable or, if curable, is not cured prior to the 30th day after written notice is given by Heinz to Parent; provided that this termination right is only available if Parent is not in breach of the merger agreement such that certain of Heinz’s conditions to closing are not capable of being satisfied by November 13, 2013.

Termination Fee Payable by Heinz (see page [])

Heinz has agreed to pay to Parent a termination fee of $750 million in cash in the following circumstances:

 

   

in the event that (i) the merger agreement is terminated by either Parent or Heinz because the merger has not been consummated prior to November 13, 2013, (ii) as of such date a person has publicly announced or disclosed and not withdrawn in a bona fide manner an acquisition proposal and (iii) any time after the date of the merger agreement and prior to the first anniversary of such termination, Heinz has entered into a definitive agreement with respect to an acquisition proposal for at least 50% of the assets or voting power of Heinz or the transactions contemplated by any acquisition proposal for at least 50% of the assets or voting power of Heinz are consummated;

 

   

in the event that (i) the merger agreement is terminated by either Parent or Heinz because the Heinz shareholders did not approve and adopt the merger upon a vote taken at the shareholder meeting, (ii) as of the time of the shareholder meeting a person has publicly announced or disclosed and not withdrawn in a bona fide manner an acquisition proposal and (iii) any time after the date of the merger agreement and prior to the first anniversary of such termination, Heinz has entered into a definitive agreement with respect to an acquisition proposal for at least 50% of the assets or voting power of Heinz or the transactions contemplated by any acquisition proposal for at least 50% of the assets or voting power of Heinz are consummated;

 

   

in the event that (i) the merger agreement is terminated by Parent due to Heinz’s breach of certain enumerated covenants, (ii) prior to such breach a person has publicly announced, disclosed or privately disclosed to Heinz and has not withdrawn in a bona fide manner an acquisition proposal and (iii) any time after the date of the merger agreement and prior to the first anniversary of such termination, Heinz has entered into a definitive agreement with respect to an acquisition proposal for at least 50% of the assets or voting power of Heinz or the transactions contemplated by any acquisition proposal for at least 50% of the assets or voting power of Heinz are consummated;

 

   

in the event the merger agreement is terminated by Parent because the Heinz Board has changed its recommendation in favor of the merger or the Heinz Board (or any committee thereof) has provided written notice of its intent to change its recommendation in favor of the merger; and

 

   

in the event the merger agreement is terminated by Heinz in order to enter into an alternative acquisition agreement that constitutes a superior proposal.

In addition, Heinz will, no later than two business days after the date of delivery by Parent of an invoice therefor, pay Parent up to $25 million of the documented out-of-pocket fees and expenses incurred by Parent, Merger Sub and their respective affiliates in connection with the merger, including the financing, in the event that (i) the merger agreement is terminated (A) by either Parent or Heinz because the merger has not been

 

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consummated prior to November 13, 2013, (B) by either Parent or Heinz because the Heinz shareholders did not approve and adopt the merger agreement upon a vote taken at the shareholder meeting or (C) by Parent due to Heinz’s breach of certain enumerated covenants and (ii) any person has (as of the termination date, in the case of the foregoing clause (A), as of the shareholder meeting at which the approval and adoption of the merger agreement by the shareholders has not been obtained upon a vote taken, in the case of the foregoing clause (B), or prior to the breach in the case of the foregoing clause (C)) publicly announced or disclosed (or in the case of clause (C) disclosed privately to Heinz) and not withdrawn in a bona fide manner an acquisition proposal for at least 50% of the assets or voting power of Heinz. The payment of the expense reimbursement will not relieve Heinz of any subsequent obligation to pay the termination fee but will be credited toward Heinz’s payment of the termination fee.

Termination Fee Payable by Parent (see page [])

Parent will pay to Heinz a reverse termination fee of $1.4 billion in cash in the event that the merger agreement is terminated by Heinz under circumstances described in the third bullet describing Heinz’s termination rights under the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page [] of this proxy statement. In certain circumstances as described under the section entitled “—Right to Delay Termination Fee Payable by Parent” below, payment of the reverse termination fee and termination of the merger agreement may be delayed for up to four months during which time the merger agreement will remain in effect and Parent may commence legal proceedings against the debt financing sources seeking to cause either the debt financing to be funded or payment by the debt financing sources of the reverse termination fee.

Right to Delay Termination Fee Payable by Parent (see page [])

If Heinz gives notice of its intent to terminate the merger agreement under circumstances described in the third bullet describing Heinz’s termination rights under the section entitled “The Merger Agreement—Termination of the Merger Agreement” beginning on page [] of this proxy statement, such notice will not be effective unless it (i) confirms that all conditions to Heinz’s obligation to close have been satisfied (other than those conditions that by their nature are to be satisfied at the closing) or that it is willing to waive all unsatisfied conditions to closing and it stands ready, willing and able to consummate the closing, and (ii) is given no earlier than the date the closing should have occurred pursuant to the merger agreement (such notice, a “closing failure notice”). However, if such closing failure notice is given under circumstances in which the failure of Parent and Merger Sub to consummate the closing on the date closing should otherwise have occurred was primarily attributable to the failure of the sources of the debt financing to fund the debt financing when all conditions to the debt financing being funded had been satisfied (other than those conditions that by their nature are to be satisfied at the time of funding), then Heinz will not be entitled to terminate the merger agreement pursuant to this termination right until (x) the date that is ten business days after such closing failure notice has been given, if, as of such tenth business day, neither Parent nor Merger Sub has commenced legal proceedings against the debt financing sources seeking to cause either the debt financing to be funded or payment by the debt financing sources of the reverse termination fee (such proceedings, “financing proceedings” and the period beginning on the date of any failure of Parent or Merger Sub to consummate the transactions contemplated by the merger agreement on the date closing should otherwise have occurred in the circumstances contemplated by this sentence until the earliest to occur of (1) the tenth business day after delivery of a closing failure notice if neither Parent nor Merger Sub has commenced financing proceedings prior to or as of such date, (2) the date that is four months after such tenth business day after delivery of the closing failure notice or (3) following the tenth business day after the delivery of a closing failure notice, the date on which Parent has ceased to diligently pursue financing proceedings, the “closing failure remedy period”), or (y) if either Parent or Merger Sub has commenced financing proceedings as of such tenth business day following delivery of a closing failure notice, the expiration of the closing failure remedy period, which termination may be effected by Heinz upon delivery of a subsequent notice providing for such termination on the date immediately following the date of delivery of such notice. If such closing failure notice is given under circumstances other than those contemplated by the immediately preceding sentence, such termination will be effective on the third business day after the closing failure notice has been given.

 

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Notwithstanding the foregoing, the occurrence from and after the date of a properly delivered closing failure notice of any development, fact, change, event, effect, occurrence or circumstance that has had or would reasonably be expected to have a company material adverse effect will not excuse payment of the reverse termination fee. At any time during the closing failure remedy period, Parent may provide written notice of its intention and capacity to consummate the closing, and the parties will, on the second business day following such notice, consummate the closing.

Remedies; Maximum Liability (see page [])

The merger agreement provides that under no circumstances will Heinz be entitled to monetary damages, reimbursement of expenses, indemnification or other payment in excess of the amount of the reverse termination fee and under no circumstances will Parent be entitled to monetary damages, reimbursement of expenses, indemnification or other payment in excess of the amount of the reverse termination fee. While Heinz may pursue both a grant of specific performance and the payment of the reverse termination fee, under no circumstances will Heinz be permitted or entitled to receive both a grant of specific performance of Parent’s obligation to consummate the merger and any money damages, including all or any portion of the reverse termination fee. In addition, the reverse termination fee, is subject to the conditions described under the section entitled “The Merger Agreement—Termination Fee Payable by Parent” beginning on page [] of this proxy statement. While Parent may pursue both a grant of specific performance and the payment of the termination fee, under no circumstances will Parent be permitted or entitled to receive both a grant of specific performance of Heinz’s obligation to consummate the merger and any money damages, including all or any portion of the termination fee.

Specific Performance (see page [])

Under certain circumstances, a party may seek specific performance to require the other party to perform its obligations under the merger agreement, including its obligation to complete the merger. In such circumstances, each party is entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of the merger agreement and to enforce the terms and provisions of the merger agreement (including the obligations of the other party to consummate the closing). The right of Heinz to seek an injunction, specific performance or other equitable remedies to enforce Parent’s obligation to cause each of the equity financing and the debt financing to be funded to fund the merger is subject to the requirement that all conditions to Parent’s obligation to close are satisfied, the satisfaction of the conditions in the debt commitment letter with respect to Heinz’s right to specifically enforce Parent’s obligation to cause the debt financing to be funded or the funding of the debt financing with respect to Heinz’s right to specifically enforce Parent’s obligation to cause the equity financing to be funded, and Heinz’s irrevocable confirmation that if the equity financing and debt financing are funded, then it would take such actions that are within its control to cause the closing to occur.

Dissenters’ Rights (see page [])

Under Pennsylvania law, holders of Heinz common stock are not entitled to and will not have dissenters’ rights in connection with the merger.

The Special Meeting (see page [])

The special meeting of Heinz shareholders is scheduled to be held at [], [], New York, New York [] on [], 2013 at [], local time. The special meeting is being held in order to consider and vote on the following proposals:

 

   

to approve and adopt the merger agreement, which is further described in the sections entitled “The Merger” and “The Merger Agreement,” beginning on pages [] and [], respectively, of this proxy statement;

 

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to approve an adjournment of the special meeting, if necessary and as permitted under the terms of the merger agreement, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and

 

   

to approve, on a non-binding, advisory basis, certain compensation to be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of Heinz’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement.

Only holders of record of Heinz common stock at the close of business on [], 2013, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, [] shares of Heinz common stock were issued and outstanding, approximately []% of which were held by Heinz’s directors and executive officers. We currently expect that Heinz’s directors and executive officers will vote their shares in favor of the proposal to approve and adopt the merger agreement and the other proposals to be considered at the special meeting, although no director or executive officer has entered into any agreement containing an obligation to do so.

The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of Heinz common stock outstanding on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement and will subject Heinz to additional expense.

You may cast one vote for each share of Heinz common stock that you own at the close of business on the record date. The proposal to approve and adopt the merger agreement and approval of each of the adjournment proposal and the named executive officer merger-related compensation proposal requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the special meeting by all Heinz shareholders entitled to vote. In addition, even if a quorum does not exist, the holders of a majority of the shares of Heinz common stock present at the special meeting, in person or by proxy, may adjourn the meeting to another place, date or time.

An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present. However, abstentions and (except with respect to shares held in any employee benefit plan) a complete failure to vote (including the failure of a record owner to execute and return a proxy card and the failure of a beneficial owner of shares held in “street name” by a broker or other holder of record to give voting instructions to the broker or other holder of record) will have no effect on the outcome of any of the proposals being voted on at the special meeting. If the beneficial owner of shares held in any employee benefit plan fails to give voting instructions to the plan trustee, those shares will be voted by the plan trustee in proportion to the voting instructions received for other shares held in such plan.

If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted for the (i) approval and adoption of the merger agreement, (ii) approval of the adjournment of the special meeting, if necessary in the view of the Heinz Board and as permitted under the terms of the merger agreement, to solicit additional proxies if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and (iii) approval, on a non-binding, advisory basis, of certain compensation to be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger. However, if you indicate that you wish to vote against the proposal to approve and adopt the merger agreement, your shares will only be voted in favor of the adjournment proposal if you indicate that you wish to vote in favor of that proposal.

 

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Interests of Heinz’s Directors and Executive Officers in the Merger (see page [])

In considering the recommendation of the Heinz Board to approve the merger agreement, you should be aware that Heinz’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Heinz shareholders generally. The Heinz Board was aware of these interests and considered them, among other matters, in evaluating the merger agreement, in reaching its decision to approve the merger agreement, and in recommending to the Heinz shareholders that the merger agreement be approved. These interests, which are described and quantified below, include the following:

 

   

Pursuant to the merger agreement, the directors and executive officers will be entitled to (i) cashout of their existing shares and existing equity-based awards (except for certain RSUs granted to Messrs. McMenamin, Mullen and Woodward) at the effective time of the merger based on the merger consideration of $72.50 per share, which is the same basis as other equityholders and (ii) continued indemnification and insurance coverage for at least six years after the effective time of the merger.

 

   

Pursuant to the merger agreement, prior to the effective time of the merger, all outstanding awards under Heinz’s total Company Annual Incentive Plan for fiscal year 2013 and its Long-Term Performance Program (“LTPP”) for fiscal years 2012-2013 and 2013-2014 will be amended to provide that each award will pay out at 100% of the applicable target award. This deemed achievement of target performance was appropriate in light of Heinz’s performance to date and the anticipated impact of the completion of the merger on the applicable performance criteria of these awards. Heinz currently estimates that, but for the proposed merger, the LTPP awards for fiscal years 2012-2013 and 2013-2014 would have paid out at least 100% of the applicable target awards.

 

   

Pursuant to the merger agreement, Heinz will establish two cash-based award programs to be in effect between the start of fiscal year 2014 and the completion of the merger. Executive officers will be eligible to participate in both of these programs. One cash-based award program will serve as a temporary replacement of the fiscal year 2014 awards that would have otherwise been made under Heinz’s 2013 Stock Incentive Plan (the “SIP Replacement Awards”), and the other will serve as a temporary replacement of the fiscal year 2014 awards that would have otherwise been made under Heinz’s LTPP (the “LTPP Replacement Awards”). In each case, an award recipient must be employed at the effective time of the merger to be eligible for payout of his or her award. The payouts of the SIP Replacement Awards and LTPP Replacement Awards will be prorated based on the period between April 29, 2013 and the effective time of the merger. For the pro rata calculations, 24 months will be used as the base period for LTPP Replacement Awards and 36 months as the base period for SIP Replacement Awards. Thus, assuming the completion of the merger will become effective on August 1, 2013, LTPP Replacement Awards will be prorated by taking the target value of a participant’s LTPP Replacement Award and multiplying it by 3/24ths and SIP Replacement Awards will be prorated by taking the target value of a participant’s SIP Replacement Award and multiplying it by 3/36ths. The aggregate grant date value of the replacement awards (before taking into account any proration) will not exceed $27,717,435 for the SIP Replacement Awards and $17,297,462 for the LTPP Replacement Awards.

 

   

Pursuant to the merger agreement, prior to the effective time of the merger, certain nonqualified deferred compensation plans in which certain Heinz executive officers participate will be amended to vest any accrued but unvested benefits. In addition, pursuant to the merger agreement, these plans and certain other nonqualified deferred arrangements in which executive officers and non-employee directors participate will be terminated and payment of accrued amounts under these plans will be made, in each case, within the first year following the completion of the merger if certain specified conditions are satisfied.

 

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All of the current executive officers are party to a severance protection agreement. Heinz’s two former named executive officers, Messrs. Milone and O’Hara, are not covered by a severance protection agreement. Under the severance protection agreements, upon a qualifying termination of employment within the 24 months following the completion of the merger, executive officers will be entitled to cash payments, additional years of credit under supplemental retirement plans and continued health and welfare benefits, and, for certain executive officers, tax reimbursement for golden parachute payments in the event certain excise taxes are triggered. Heinz does not currently anticipate such excise taxes being triggered and, thus, does not expect to make tax gross-up payments to any of the executive officers. Eight of the executive officers entered into their severance protection agreements in 2007 or earlier, and three executive officers entered into their agreements in February 2013. The agreements entered into in February of 2013 do not provide for any tax reimbursement.

Delisting and Deregistration of Heinz Common Stock (see page [])

Upon completion of the merger Heinz common stock will be delisted from the NYSE and deregistered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Litigation Related to the Merger (see page [])

Shortly following the announcement of the merger, several putative class action and/or shareholder derivative complaints challenging the merger were filed in the Court of Common Pleas of Allegheny County, Pennsylvania (six complaints) and the United States District Court for the Western District of Pennsylvania (two complaints), against various combinations of Heinz, 3G Capital, Berkshire Hathaway, Parent, Merger Sub and the individual members of the Heinz Board. The complaints generally allege, among other things, that the members of the Heinz Board breached their fiduciary duties to Heinz shareholders and violated Pennsylvania state law by entering into the merger agreement, approving the proposed merger and failing to take steps to maximize Heinz’s value to its shareholders, and that the other defendants aided and abetted such breaches of fiduciary duties. In addition, the complaints allege, among other things, that the proposed merger improperly favors 3G Capital and Berkshire Hathaway and that certain provisions of the merger agreement unduly restrict Heinz’s ability to negotiate with other potential bidders. The complaints generally seek, among other things, declaratory and injunctive relief, preliminary injunctive relief prohibiting or delaying the defendants from consummating the merger, other forms of equitable relief and unspecified amounts of damages. Several plaintiffs who filed the three earliest filed complaints in Pennsylvania state court have filed competing motions to consolidate the Pennsylvania state court actions and to appoint co-lead counsel, and the court has scheduled a hearing on March 26, 2013 for those motions to be presented. In addition, Heinz and/or the Heinz Board have received several demands by purported Heinz shareholders to investigate and remedy potential or alleged breaches of fiduciary duties in connection with the proposed merger and/or to review Heinz’s books and records. In response to these demands, the Heinz Board has appointed a special litigation committee, consisting of Dean R. O’Hare, Lynn C. Swann, Thomas J. Usher and Michael F. Weinstein, to among other things, investigate and evaluate the various demands, including the allegations and requests for action contained therein. Additional lawsuits arising out of or relating to the merger agreement or the merger may be filed in the future. There can be no assurance that Heinz or any of the other defendants will be successful in the outcome of the pending or any potential future lawsuits. An adverse judgment for monetary damages could have a material adverse effect on the operations and liquidity of Heinz. A preliminary injunction could delay or jeopardize the completion of the merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin completion of the merger.

Directors’ and Officers’ Indemnification (see page [])

Parent has agreed to, and has agreed to cause the surviving corporation to, indemnify and hold harmless, and advance expenses as incurred to, in each case to the fullest extent permitted under applicable law, each present and former director, officer or representative of Heinz or any of its subsidiaries and in a manner

 

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consistent with the terms and conditions on which indemnification is provided for as of the date of the merger agreement (collectively, the “Indemnified Parties”) against any costs incurred in connection with any claim arising out of or related to such Indemnified Parties’ service as a director, officer or representative of Heinz or any of its subsidiaries or services performed by such persons at the request of Heinz or any of its subsidiaries at or prior to the effective time of the merger, whether claimed prior to, at or after the effective time of the merger.

Market Prices of Heinz Common Stock (see page [])

The merger consideration of $72.50 per share represents a 19.9% premium to the $60.48 closing price per share of Heinz common stock on the NYSE on February 13, 2013, the last trading day before the public announcement of the merger agreement, a 18.9% premium to Heinz’s all-time (as of February 13, 2013) closing high share price of $61.00, a 22.6% premium to Heinz’s average share price of $59.14 for the 90 days ending on February 13, 2013, a 30.0% premium to Heinz’s average share price of $55.78 for the one year ending on February 13, 2013 and a 40.3% premium to Heinz’s low share price of $51.69 during the one year ending on February 13, 2013. The closing price of Heinz common stock on the NYSE on [], 2013, the most recent practicable date prior to the date of this proxy statement, was $[] per share. You are encouraged to obtain current market prices of Heinz common stock in connection with voting your shares of Heinz common stock.

 

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QUESTIONS AND ANSWERS

The following are some questions that you, as a shareholder of Heinz, may have regarding the merger and the special meeting and the answers to those questions. Heinz urges you to carefully read the remainder of this proxy statement because the information in this section does not provide all the information that might be important to you with respect to the merger and the special meeting. Additional important information is also contained in its annexes to and the documents incorporated by reference into this proxy statement.

 

Q: What is the purpose of the special meeting?

 

A: At the special meeting, shareholders will consider and act upon the matters outlined in the notice of meeting on the cover page of this proxy statement, namely:

 

   

the approval and adoption of the merger agreement;

 

   

the approval of an adjournment of the special meeting, if necessary and as permitted under the terms of the merger agreement, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and

 

   

the approval, on a non-binding, advisory basis, of certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger.

 

Q: Where and when is the special meeting?

 

A: The special meeting is scheduled to be held at [], [], New York, New York [] on [], 2013 at [] a.m., local time.

 

Q: How does the Heinz Board recommend that I vote on the proposals?

 

A: The Heinz Board unanimously recommends that you vote as follows:

 

   

FOR” the approval and adoption of the merger agreement;

 

   

FOR” the approval of an adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and

 

   

FOR” the approval, on a non-binding, advisory basis, of certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger.

 

Q: How does the per share merger consideration compare to the market price of Heinz common stock prior to announcement of the merger?

 

A: The merger consideration of $72.50 per share represents a 19.9% premium to the $60.48 closing price per share of Heinz common stock on the NYSE on February 13, 2013, the last trading day before the public announcement of the merger agreement, a 18.9% premium to Heinz’s all-time (as of February 13, 2013) closing high share price of $61.00, a 22.6% premium to Heinz’s average share price of $59.14 for the 90 days ending on February 13, 2013, a 30.0% premium to Heinz’s average share price of $55.78 for the one year ending on February 13, 2013 and a 40.3% premium to Heinz’s low share price of $51.69 during the one year ending on February 13, 2013. The closing price of Heinz common stock on the NYSE on [], 2013, the most recent practicable date prior to the date of this proxy statement, was $[] per share. You are encouraged to obtain current market prices of Heinz common stock in connection with voting your shares of Heinz common stock.

 

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Q: What will happen in the merger?

 

A: If the merger is completed, Merger Sub will merge with and into Heinz, whereupon the separate existence of Merger Sub will cease and Heinz will be the surviving corporation and a wholly owned subsidiary of Parent. As a result of the merger, Heinz common stock will no longer be publicly traded and you will no longer have any interest in Heinz’s future earnings or growth. In addition, Heinz common stock will be delisted from the NYSE and deregistered under the Exchange Act, and Heinz will no longer be required to file periodic reports with the SEC with respect to Heinz common stock, in each case in accordance with applicable law, rules and regulations.

 

Q: Who will own Heinz after the merger?

 

A: Immediately following the merger, Heinz will be a wholly owned subsidiary of Parent, an entity owned by 3G Capital and Berkshire Hathaway.

 

Q: What will I receive in the merger?

 

A: Upon the terms and subject to the conditions of the merger agreement, if the merger is completed, the holders of Heinz common stock will have the right to receive $72.50 in cash, without interest and less any applicable withholding taxes, for each share of Heinz common stock that they own immediately prior to the effective time of the merger. Heinz expects to continue to declare and pay regular quarterly cash dividends of $0.515 per share of common stock until the effective time of the merger with record dates and payment dates that are substantially consistent with Heinz’s past practice. If, at the effective time of the merger, there are any declared and unpaid dividends with a record date prior to the effective time, holders of Heinz common stock as of that record date will have the right to receive those dividends in addition to any merger consideration. The merger agreement does not permit Heinz, and Heinz does not expect, to pay a prorated dividend for the quarter in which the merger is completed. You will not own any shares of the capital stock in the surviving corporation.

 

Q: Am I entitled to dissenters’ rights instead of receiving the merger consideration?

 

A: Under Pennsylvania law, holders of Heinz common stock are not entitled to and will not have dissenters’ rights in connection with the merger.

 

Q: What vote is required to approve and adopt the merger agreement?

 

A: The proposal to approve and adopt the merger agreement requires the affirmative vote of a majority of the votes cast by all Heinz shareholders entitled to vote at the special meeting (provided a quorum is present in person or by proxy).

 

Q: What vote is required to approve the other proposals?

 

A: The adjournment proposal and the named executive officer merger-related compensation proposal, approval of which is not required to complete the merger, each require the affirmative vote of a majority of the votes cast by all Heinz shareholders entitled to vote at the special meeting (provided a quorum is present in person or by proxy).

 

Q: When do you expect the merger to be completed?

 

A: In order to complete the merger, Heinz must obtain the shareholder approval described in this proxy statement and the other closing conditions under the merger agreement must be satisfied or waived. The parties to the merger agreement currently expect to complete the merger late in the second calendar quarter of 2013 or in the third calendar quarter of 2013, although Heinz cannot assure completion by any particular date, if at all. Because the merger is subject to a number of conditions, the exact timing of the merger cannot be determined at this time.

 

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Q: Why am I being asked to consider and act upon to approve on a non-binding, advisory basis certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger?

 

A: The SEC rules require Heinz to seek a non-binding, advisory vote with respect to certain payments that will be made to Heinz’s named executive officers in connection with the merger, approval of which is not required to complete the merger.

 

Q: Do you expect the merger to be taxable to Heinz shareholders?

 

A: The exchange of Heinz common stock for cash in the merger will be a taxable transaction for U.S. federal income tax purposes and may also be taxable under state and local and other tax laws. You should read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page [] of this proxy statement and consult your tax advisers regarding the U.S. federal income tax consequences of the merger to you in your particular circumstances, as well as tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

 

Q: Who is entitled to vote at the special meeting?

 

A: The record date for the special meeting is [], 2013. Only shareholders of record at the close of business on that date are entitled to attend and vote at the special meeting or any adjournment or postponement thereof. The only class of stock that can be voted at the meeting is Heinz common stock. Each share of Heinz common stock is entitled to one vote on all matters that come before the meeting. At the close of business on the record date, there were [] shares of Heinz common stock issued and outstanding, approximately []% of which were held by Heinz’s directors and executive officers. We currently expect that Heinz’s directors and executive officers will vote their shares in favor of the proposal to approve and adopt the merger agreement and the other proposals to be considered at the special meeting, although no director or executive officer is obligated to do so.

 

Q: Do I have a vote if I am a holder of Heinz first series preferred shares?

 

A: On [], 2013, Heinz mailed to holders of record of its Third Cumulative Preferred Stock, $1.70 First Series (the “first series preferred shares”), a notice of redemption, informing holders that, in accordance with Heinz’s articles of incorporation, Heinz was redeeming the first series preferred shares on [], 2013 at a price of $28.50 per first series preferred share (plus accrued and unpaid dividends) (the “redemption price”) and published notice of the redemption. On [], 2013, Heinz also deposited in trust for the account of holders of the first series preferred shares the amount necessary to fund the redemption. Accordingly, pursuant to Heinz’s articles of incorporation, as of [], 2013, the first series preferred shares are deemed to no longer be outstanding for any purpose and all rights with respect to such shares (including voting rights with respect to the merger and the other proposals in this proxy statement) have ceased and are terminated other than the right of such holders to receive the redemption price for their first series preferred shares or to convert their first series preferred shares into Heinz common stock at or before 5:00 pm Eastern time on the redemption date.

As described further in the notice of redemption, at or before 5:00 pm Eastern time on the redemption date, holders of first series preferred shares have or had the right to convert those shares into shares of Heinz common stock at a rate of 15 shares of Heinz common stock for each first series preferred share. If you convert or converted your first series preferred shares into Heinz common stock at or before 5:00 pm Eastern time on the record date, you have the right to vote those shares of Heinz common stock at the special meeting. If you have any questions regarding the redemption of first series preferred shares or your right of conversion, please contact Wells Fargo Shareowner Services at (800) 253-3399.

 

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Q: Who may attend the special meeting?

 

A: Shareholders of record as of the close of business on [], 2013, or their duly appointed proxies, may attend the meeting. “Street name” holders (those whose shares are held through a broker, bank or other nominee) should bring a copy of an account statement reflecting their ownership of Heinz common stock as of the record date. If you are a “street name” holder and you wish to vote at the special meeting, you must also bring a proxy from the record holder (your broker, bank or other nominee) of the shares of Heinz common stock authorizing you to vote at the special meeting. We intend to limit attendance to shareholders as of the record date. All shareholders should bring photo identification. Cameras, recording devices, and other electronic devices are not permitted at the special meeting. Registration will begin at [] a.m., local time.

 

Q: Who is soliciting my vote?

 

A: The Heinz Board is soliciting your proxy, and Heinz will bear the cost of soliciting proxies. MacKenzie Partners, Inc. has been retained to assist with the solicitation of proxies. MacKenzie Partners, Inc. will be paid approximately $25,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, custodians, and other like parties to the beneficial owners of shares of Heinz common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail or other electronic medium by MacKenzie Partners, Inc. or, without additional compensation, by certain of Heinz’s directors, officers and employees.

 

Q: What do I need to do now?

 

A: Carefully read and consider the information contained in and incorporated by reference into this proxy statement, including its annexes. Whether or not you expect to attend the special meeting in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.

 

Q: How do I vote if my shares are registered directly in my name?

 

A: If you are a shareholder of record, there are four methods by which you may vote at the special meeting:

 

   

Internet: To vote over the internet, log on to the internet and follow the instructions printed on your proxy card. If you vote over the internet, you do not have to mail in a proxy card.

 

   

Telephone: To vote by telephone, call [] and follow the instructions printed on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.

 

   

Mail: To vote by mail, complete, sign and date a proxy card and return it promptly in the postage paid envelope provided. If you return your signed proxy card to us before the special meeting, we will vote your shares as you direct.

 

   

In Person: To vote in person, attend the special meeting. You will be given a ballot when you arrive.

Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person if you have already voted by proxy. Please choose only one method to cast your vote by proxy. We encourage you to vote over the internet or by telephone, both of which are convenient, cost-effective and reliable alternatives to returning a proxy card by mail.

 

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Q: How do I vote if my shares are held in the name of my broker (street name)?

 

A: If your shares are held by your broker, bank or other nominee, often referred to as held in “street name,” you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.

 

Q: How do I vote if I hold shares in one or more of Heinz’s employee benefit plans?

 

A: Shares held in a benefit plan that you are entitled to vote will be voted by the plan trustee pursuant to your instructions using the voting instruction card provided by the trustee or following the other instructions provided by the trustee.

 

Q: Can I change my vote after I submit my proxy?

 

A: Yes. You can change or revoke your proxy at any time before the final vote at the special meeting. If you are the record holder of your shares, you may change or revoke your proxy in any one of three ways:

 

   

You may submit another properly completed proxy bearing a later date, whether over the internet, by telephone or by mail;

 

   

You may send a written notice that you are revoking your proxy to the Judge of Election, Wells Fargo Shareowner Services, P.O. Box 64945, St. Paul, MN 55164; or

 

   

You may attend the special meeting and notify the election officials that you wish to revoke your proxy to vote in person. Simply attending the special meeting will not, by itself, revoke your proxy.

If your shares are held by your broker or bank as a nominee or agent, you will have to follow the instructions provided by your broker or bank to change or revoke your proxy.

If your shares are held in any employee benefit plan, you must follow the specific instructions provided to you by the plan trustee to change or revoke any voting instructions you have already provided to the trustee.

If you have questions about how to vote or change your vote, you should contact the Judge of Election, Wells Fargo Shareowner Services, P.O. Box 64945, St. Paul, MN 55164.

 

Q: Do I need to do anything with my Heinz common stock certificates now? Should I send in my stock certificates with my proxy card?

 

A: No. After the merger is completed, if you hold certificates representing shares of Heinz common stock, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of Heinz common stock for the merger consideration. Upon surrender of the certificates along with the executed letter of transmittal and other required documents described in the instructions or otherwise required by the paying agent in accordance with the merger agreement, you will receive the merger consideration.

 

Q: How many shares must be present to constitute a quorum for the meeting?

 

A: The presence at the special meeting, in person or by proxy, of a majority of the shares of Heinz common stock outstanding on the record date will constitute a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be present at the special meeting will necessitate an adjournment or postponement and will subject Heinz to additional expense.

 

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Q: What if I abstain from voting?

 

A: If you attend the special meeting or send in your signed proxy card, but abstain from voting on any proposal, your shares will still be counted for purposes of determining whether a quorum exists. If you abstain from voting on any of the proposals, your abstention will have no effect on the outcome of the vote on such proposal.

 

Q: Will my shares be voted if I do not sign and return my proxy card or vote by telephone or over the internet or in person?

 

A: If you are a registered shareholder and you do not sign and return your proxy card or vote by telephone, over the internet or in person, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists. Questions concerning stock certificates and registered shareholders may be directed to our transfer agent, [], at [].

If your shares are held in street name and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. Under NYSE rules, all of the proposals in this proxy statement are non-routine matters. Accordingly, if your shares are held in “street name” and you do not issue instructions to your broker, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.

If your shares are held in any employee benefit plan that you are entitled to vote, but do not vote, your shares will be voted by the plan trustees in proportion to the voting instructions received for other shares and will be counted for purposes of determining whether a quorum exists.

You will have the right to receive the merger consideration if the merger is approved, adopted and completed even if your shares are not voted at the special meeting.

 

Q: What is a broker non-vote?

 

A: Broker non-votes are shares held by brokers and other record holders that are present in person or by proxy at the special meeting, but with respect to which the broker or other record holder is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary voting power on such proposal. Because brokers and other record holders do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Heinz common stock held in “street name” does not give voting instructions to the broker or other holder of record, then those shares will not be present in person or by proxy at the special meeting. As a result, it is expected that there will not be any broker non-votes in connection with any of the three proposals described in this proxy statement.

 

Q: Will my shares held in “street name” or another form of record ownership be combined for voting purposes with shares I hold of record?

 

A: No. Because any shares you may hold in “street name” will be deemed to be held by a different shareholder than any shares you hold of record, any shares so held will not be combined for voting purposes with shares you hold of record. Similarly, if you own shares in various registered forms, such as jointly with your spouse, as trustee of a trust or as custodian for a minor, you will receive, and will need to sign and return, a separate proxy card for those shares because they are held in a different form of record ownership. Shares held by a corporation or business entity must be voted by an authorized officer of the entity. Shares held in an individual retirement account must be voted under the rules governing the account.

 

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Q: What does it mean if I receive more than one set of proxy materials?

 

A: This means you own shares of Heinz common stock that are registered under different names or are in more than one account. For example, you may own some shares directly as a shareholder of record and other shares through a broker or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign and return all of the proxy cards or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.

 

Q: Who will count the votes?

 

A: The votes will be counted by the Judge of Election appointed for the special meeting.

 

Q: Can I participate if I am unable to attend the special meeting?

 

A: If you are unable to attend the meeting in person, we encourage you to send in your proxy card or to vote by telephone or over the internet. The special meeting will not be broadcast telephonically or over the internet.

 

Q: Where can I find the voting results of the special meeting?

 

A: Heinz intends to announce preliminary voting results at the special meeting and publish final results in a Current Report on Form 8-K that will be filed with the SEC following the special meeting. All reports that Heinz files with the SEC are publicly available when filed.

 

Q: What happens if the merger is not completed?

 

A: If the merger agreement is not approved by Heinz shareholders or if the merger is not completed for any other reason, Heinz shareholders will not receive any payment for their shares of Heinz common stock in connection with the merger. Instead, Heinz will remain an independent public company and shares of Heinz common stock will continue to be listed and traded on the NYSE. The merger agreement provides that, upon termination of the merger agreement under certain circumstances, Heinz will be required to pay to Parent a termination fee of $750 million. See the section entitled “The Merger Agreement—Termination Fee Payable by Heinz” beginning on page [] of this proxy statement for a discussion of the circumstances under which such a termination fee will be required to be paid. In addition, if Parent terminates the merger agreement under certain circumstances, Heinz will be required to reimburse Parent for its out-of-pocket fees and expenses incurred on or prior to such termination in connection with the transactions contemplated by the merger agreement, up to $25 million in the aggregate. The amount of any such reimbursed expenses will be credited against a later payment by Heinz of the termination fee. The merger agreement also provides that, upon termination of the merger agreement under certain other circumstances, Parent will be required to pay to Heinz a reverse termination fee of $1.4 billion. See the section entitled “The Merger Agreement—Termination Fee Payable by Parent” beginning on page [] of this proxy statement for a discussion of the circumstances under which the termination fee and the reverse termination fee will be required to be paid.

 

Q: How can I obtain additional information about Heinz?

 

A:

Heinz will provide copies of this proxy statement and its 2012 Annual Report to Shareholders, including its Annual Report on Form 10-K for the fiscal year ended April 29, 2012, without charge to any shareholder who makes a written request to our Secretary at H. J. Heinz Company, One PPG Place, Pittsburgh, Pennsylvania 15222. Heinz’s Annual Report on Form 10-K and other SEC filings may also be accessed at www.sec.gov or on the Investor Relations section of Heinz’s website at www.heinz.com. Heinz’s website

 

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  address is provided as an inactive textual reference only. The information provided on or accessible through our website is not part of this proxy statement and is not incorporated in this proxy statement by this or any other reference to our website provided in this proxy statement.

 

Q: How many copies of this proxy statement and related voting materials should I receive if I share an address with another shareholder?

 

A: The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single annual report or proxy statement, as applicable, addressed to those shareholders. This process, which is commonly referred to as “householding”, potentially provides extra convenience for shareholders and cost savings for companies.

Heinz and some brokers may be householding our proxy materials by delivering proxy materials to multiple shareholders who request a copy and share an address, unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker if your shares are held in a brokerage account or Heinz if you are a shareholder of record. You can notify us by sending a written request to our Secretary at H. J. Heinz Company, One PPG Place, Pittsburgh, Pennsylvania 15222, or calling (412) 456-5700. Shareholders who share a single address, but receive multiple copies of the proxy statement, may request that in the future they receive a single copy by notifying Heinz at the telephone and address set forth in the prior sentence. In addition, Heinz will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of the proxy statement to a shareholder at a shared address to which a single copy of the documents was delivered pursuant to a prior request.

 

Q: Who should I contact if I have any questions?

 

A: If you have questions about the merger or the other matters to be voted on at the special meeting or desire additional copies of this proxy statement or additional proxy cards or otherwise need assistance voting, you should contact:

 

LOGO

105 Madison Avenue

New York, New York 10016

Call Toll-Free: (800) 322-2885

or

 

LOGO

H. J. Heinz Company

One PPG Place

Pittsburgh, Pennsylvania 15222

(412) 456-5700

Attn: Secretary

 

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CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This proxy statement, and the documents incorporated by reference in this proxy statement, include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts and are subject to risks and uncertainties in our operations, business and economic and political environment. Forward-looking statements may be identified by the use of words such as “achieve”, “should”, “could”, “may”, “anticipates”, “expects”, “might”, “believes”, “intends”, “predicts”, “will” and other similar expressions. These statements are based on the current expectations and beliefs of Heinz and involve a number of risks and uncertainties that could cause actual results, performance and achievements, or industry results, to differ materially from those stated or implied by the forward-looking statements. Those risks and uncertainties include, but are not limited to:

 

   

the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement, including a termination of the merger agreement under circumstances that could require Heinz to pay a termination fee or expense reimbursement;

 

   

the failure to receive, on a timely basis or otherwise, the required approvals by Heinz shareholders and government or regulatory agencies with regard to the merger agreement;

 

   

the risk that a closing condition to the merger agreement may not be satisfied;

 

   

Heinz’s and Parent’s ability to complete the proposed merger on a timely basis or at all;

 

   

the failure of Parent to obtain the necessary financing in connection with the merger agreement;

 

   

the failure of the merger to be completed on a timely basis or at all for any other reason;

 

   

the risks that Heinz’s business may suffer as a result of uncertainties surrounding the merger;

 

   

the ability of Heinz to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners pending the consummation of the merger;

 

   

the diversion of management’s attention from ongoing business concerns;

 

   

limitations placed on Heinz’s ability to operate its business under the merger agreement;

 

   

the possibility that costs related to the merger will be greater than expected;

 

   

the outcome of any legal proceedings that have been or may be instituted against Heinz or others relating to the merger agreement or the merger; and

 

   

the risk that the industry may be subject to future regulatory or legislative actions and other risks that are described in SEC reports filed or furnished by Heinz.

Additional information about these factors and about the material factors or assumptions underlying such forward-looking statements may be found under Part I, Item 1A in Heinz’s Annual Report on Form 10-K for the fiscal year ended April 29, 2012 and under Part II, Item 1A in Heinz’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 27, 2013. Heinz cautions that the foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions with respect to the merger, shareholders and others should carefully consider the foregoing factors and other uncertainties and potential events. All subsequent written and oral forward-looking statements concerning the merger or other matters attributable to Heinz or any other person acting on its behalf are expressly qualified in their entirety by the cautionary statements referenced above. The forward-looking statements contained in this proxy statement speak only as of the date of this proxy statement. Heinz undertakes no obligation to update or revise any forward-looking statements for any reason, even if new information becomes available or other events occur in the future, except as may be required by law.

 

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THE COMPANIES

H. J. Heinz Company

H. J. Heinz Company and its subsidiaries manufacture and market an extensive line of food products throughout the world. Heinz’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products. Heinz’s products are manufactured and packaged to provide safe, wholesome foods for consumers, as well as foodservice and institutional customers. Many products are prepared from recipes developed in Heinz’s innovation and research centers. Ingredients are carefully selected, inspected and passed on to factory kitchens where they are processed, after which the intermediate product is filled automatically into containers of glass, metal, plastic, paper or fiberboard, which are then sealed. Products are prepared by sterilization, blending, fermentation, pasteurization, homogenization, chilling, freezing, pickling, drying, freeze drying, baking or extruding, then labeled and cased for market.

Shares of Heinz common stock are listed with, and trade on, the New York Stock Exchange (the “NYSE”) under the symbol “HNZ”.

Heinz was incorporated in Pennsylvania on July 27, 1900. In 1905, it succeeded to the business of a partnership operating under the same name which had developed from a food business founded in 1869 in Sharpsburg, Pennsylvania by Henry J. Heinz. Our principal executive offices are maintained at One PPG Place, Pittsburgh, Pennsylvania 15222, and the telephone number at that address is (412) 456-5700. Our corporate website address is www.heinz.com. The information provided on the Heinz website is not part of this proxy statement and is not incorporated in this proxy statement by reference or any other reference to its website provided in this proxy statement.

For additional information about Heinz included in documents incorporated by reference into this proxy statement, see the section entitled “Where You Can Find More Information” on page [].

Hawk Acquisition Holding Corporation

c/o 3G Capital Partners Ltd.

600 Third Avenue, 37th Floor

New York, New York 10016

(212) 893-6727

Hawk Acquisition Holding Corporation, or Parent, is a Delaware corporation which was formed and is controlled by, Berkshire Hathaway Inc., a Delaware corporation, and 3G Special Situations Fund III, L.P., a Cayman exempted limited partnership, solely for the purpose of entering into the merger agreement and completing the transactions contemplated by the merger agreement and the related financing transactions. Parent has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement. Upon completion of the merger, Heinz will be a direct wholly owned subsidiary of Parent.

Berkshire Hathaway Inc.

Berkshire Hathaway Inc.

3555 Farnam Street, Suite 1440

Omaha, Nebraska 68131

(402) 346-1400

Berkshire Hathaway Inc. and its subsidiaries engage in diverse business activities including property and casualty insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Berkshire Hathaway common stock is listed on the NYSE under the trading symbols BRK.A and BRK.B.

 

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3G Special Situations Fund III, L.P.

c/o 3G Capital Partners Ltd.

600 Third Avenue, 37th Floor

New York, New York 10016

(212) 893-6727

3G Special Situations Fund III, L.P., an affiliate of 3G Capital Partners Ltd., is a private equity fund principally engaged in the business of making investments in securities. 3G Capital is a global investment firm focused on long-term value, with a particular emphasis on maximizing the potential of brands and businesses. The firm and its partners have a strong history of generating value through operational excellence, board involvement, deep sector expertise and an extensive global network. Among other investments, an investment fund affiliated with 3G Capital is the majority stockholder of Burger King Worldwide, Inc., a customer of Heinz in the ordinary course of business.

Hawk Acquisition Sub, Inc.

c/o 3G Capital Partners Ltd.

600 Third Avenue, 37th Floor

New York, New York 10016

(212) 893-6727

Hawk Acquisition Sub, Inc., or Merger Sub, is a Pennsylvania corporation that was formed by Parent solely for the purpose of facilitating the acquisition of Heinz. Merger Sub is a wholly owned subsidiary of Parent and has not engaged in any business except for activities incidental to its formation and as contemplated by the merger agreement and the related financing transactions. Upon the completion of the merger, Merger Sub will cease to exist as a separate entity and Heinz will continue as the surviving corporation.

 

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THE SPECIAL MEETING

This proxy statement is being provided to the shareholders of Heinz as part of a solicitation of proxies by the Heinz Board for use at the special meeting to be held at the time and place specified below, and at any properly convened meeting following an adjournment or postponement thereof. This proxy statement provides shareholders of Heinz with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting is scheduled to be held at [], [], New York, New York [] on [], 2013 at [] a.m., local time.

Purpose of the Special Meeting

At the special meeting, Heinz shareholders will be asked to consider and vote on the following proposals:

 

   

to approve and adopt the merger agreement, which is further described in the sections entitled “The Merger” and “The Merger Agreement”, beginning on pages [] and [], respectively, of this proxy statement;

 

   

to approve an adjournment of the special meeting, if necessary and as permitted under the terms of the merger agreement, to solicit additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of such adjournment to approve and adopt the merger agreement; and

 

   

to approve, on a non-binding, advisory basis, certain compensation that will or may be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger, discussed under the section entitled “The Merger—Interests of Heinz’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement.

Heinz shareholders must approve and adopt the merger agreement for the merger to occur. If Heinz shareholders fail to approve the merger agreement, the merger will not occur. The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve the merger. Accordingly, a shareholder may vote to approve the executive compensation and vote not to approve the merger and vice versa. Because the vote on executive compensation is advisory in nature only, it will not be binding on either Heinz or Parent. Accordingly, because Heinz is contractually obligated to pay the compensation, the compensation will be payable, subject only to the conditions applicable thereto, if the merger is approved and adopted and regardless of the outcome of the advisory vote.

Heinz does not expect a vote to be taken on any other matters at the special meeting or any adjournment or postponement thereof. If any other matters are properly presented at the special meeting or any adjournment or postponement thereof for consideration, however, the holders of the proxies will have discretion to vote on these matters in accordance with their best judgment.

Recommendation of the Heinz Board of Directors

After careful consideration, the Heinz Board unanimously approved the merger agreement, the merger and the transactions contemplated thereby. Certain factors considered by the Heinz Board in reaching its decision to authorize and adopt the merger agreement and approve the merger can be found in the section entitled “The Merger—Heinz’s Reasons for the Merger” beginning on page [] of this proxy statement.

 

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The Heinz Board unanimously recommends that the Heinz shareholders vote “FOR” the proposal to approve and adopt the merger agreement, “FOR” the adjournment proposal and “FOR” the named executive officer merger-related compensation proposal.

Record Date; Shareholders Entitled to Vote

Only holders of record of Heinz common stock at the close of business on [], 2013, the record date for the special meeting, will be entitled to notice of, and to vote at, the special meeting or any adjournments or postponements of the special meeting. At the close of business on the record date, [] shares of Heinz common stock were issued and outstanding and held by [] holders of record.

Holders of record of Heinz common stock are entitled to one vote for each share of Heinz common stock they own at the close of business on the record date.

Quorum

The presence at the special meeting, in person or by proxy, of the holders of a majority of the shares of Heinz common stock outstanding on the record date will constitute a quorum. Any shares of Heinz common stock held by Heinz or by any of its subsidiaries are not considered to be outstanding for purposes of determining a quorum. There must be a quorum for business to be conducted at the special meeting. Failure of a quorum to be represented at the special meeting will necessitate an adjournment or postponement and will subject Heinz to additional expense. Once a share is represented at the special meeting, it will be counted for the purpose of determining a quorum at the special meeting and any adjournment of the special meeting. However, if a new record date is set for the adjourned special meeting, then a new quorum will have to be established. If you submit a properly executed proxy card, even if you abstain from voting, your shares will be counted for purposes of calculating whether a quorum is present at the special meeting.

Required Vote

The proposal to approve and adopt the merger agreement requires the affirmative vote of a majority of the votes cast by all Heinz shareholders entitled to vote to approve and adopt the merger agreement. Approval of each of the adjournment proposal and the named executive officer merger-related compensation proposal requires the affirmative vote of a majority of the votes cast by all Heinz shareholders entitled to vote. In addition, even if a quorum does not exist, a majority of the shares of Heinz common stock present at the special meeting, in person or by proxy, may adjourn the meeting to another place, date or time.

Abstentions and Broker Non-Votes

An abstention occurs when a shareholder attends a meeting, either in person or by proxy, but abstains from voting. At the special meeting, abstentions will be counted in determining whether a quorum is present, but will have no effect on the outcome of any of the proposals being voted on at the special meeting.

If no instruction as to how to vote is given (including an instruction to abstain) in an executed, duly returned and not revoked proxy, the proxy will be voted for (i) adoption of the merger agreement, (ii) approval of the adjournment of the special meeting, if necessary and as permitted under the terms of the merger agreement, to solicit additional proxies if there are not sufficient votes at the time of such adjournment to approve the merger agreement; and (iii) approval, on a non-binding, advisory basis, of certain compensation to be paid by Heinz to its named executive officers that is based on or otherwise relates to the merger. However, if you indicate that you wish to vote against the proposal to approve the merger agreement, your shares will only be voted in favor of the adjournment proposal if you indicate that you wish to vote in favor of that proposal.

Broker non-votes are shares held by brokers and other record holders that are present in person or by proxy at the special meeting, but with respect to which the broker or other record holder is not instructed by the beneficial owner of such shares how to vote on a particular proposal and the broker does not have discretionary

 

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voting power on such proposal. Because brokers and other record holders do not have discretionary voting authority with respect to any of the three proposals described in this proxy statement, if a beneficial owner of shares of Heinz common stock held in “street name” does not give voting instructions to the broker or other holder of record, then those shares will not be present in person or by proxy at the special meeting. As a result, it is expected that there will not be any broker non-votes in connection with any of the three proposals described in this proxy statement.

Failure to Vote

If you are a registered shareholder and you do not sign and return your proxy card or vote by telephone, over the internet or in person, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists. Questions concerning stock certificates and registered shareholders may be directed to our transfer agent, [], at [].

If your shares are held in “street name” and you do not issue instructions to your broker, your broker may vote your shares at its discretion on routine matters, but may not vote your shares on non-routine matters. Under NYSE rules, all of the proposals in this proxy statement are non-routine matters. Accordingly, if your shares are held in street name and you do not issue instructions to your broker, your shares will not be voted at the special meeting and will not be counted for purposes of determining whether a quorum exists.

If your shares are held in any employee benefit plan that you are entitled to vote, but do not vote, your shares will be voted by the plan trustees in proportion to the voting instructions received for other shares and will be counted for the purpose of determining whether a quorum exists.

Voting by Heinz’s Directors and Executive Officers

At the close of business on the record date, directors and executive officers of Heinz and their affiliates were entitled to vote [] shares of Heinz common stock, or approximately []% of the shares of Heinz common stock issued and outstanding on that date. We currently expect that Heinz’s directors and executive officers will vote their shares in favor of the proposal to approve and adopt the merger agreement and the other proposals to be considered at the special meeting, although none of them is obligated to do so.

Voting at the Special Meeting

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Please note that if your shares of Heinz common stock are held by a broker, bank or other nominee, and you wish to vote at the special meeting, you must bring to the special meeting a proxy from the record holder (your broker, bank or other nominee) of the shares of Heinz common stock authorizing you to vote at the special meeting.

You may also authorize the persons named as proxies on the proxy card to vote your shares by returning the proxy card by mail, through the internet, or by telephone. Although Heinz offers four different voting methods, Heinz encourages you to vote over the internet or by phone as Heinz believes they are the most cost-effective methods. We also recommend that you vote as soon as possible, even if you are planning to attend the special meeting, so that the vote count will not be delayed. Both the internet and the telephone provide convenient, cost-effective alternatives to returning your proxy card by mail. If you vote your shares over the internet, you may incur costs associated with electronic access, such as usage charges from internet access providers. If you choose to vote your shares over the internet or by telephone, there is no need for you to mail back your proxy card.

To Vote Over the Internet:

To vote over the internet, log on to the internet and follow the instructions printed on your proxy card. If you vote over the internet, you do not have to mail in a proxy card.

 

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To Vote By Telephone:

To vote by telephone, call [] and follow the instructions printed on your proxy card. If you vote by telephone, you do not have to mail in a proxy card.

To Vote By Proxy Card:

To vote by proxy card, complete and sign the proxy card and mail it to the address indicated on the proxy card.

If you return your signed proxy card without indicating how you want your shares of Heinz common stock to be voted with regard to a particular proposal, your shares of Heinz common stock will be voted in favor of each such proposal. Proxy cards that are returned without a signature will not be counted as present at the special meeting and cannot be voted.

If your shares are held by your broker, bank or other nominee, you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.

If your shares are held in a benefit plan that you are entitled to vote, you will receive a form from the trustee of your plan seeking instructions as to how your shares should be voted. You should contact the trustee with questions about how to provide or revoke your instructions.

Revocation of Proxies

You can revoke your proxy at any time before the final vote at the special meeting. If you are the record holder of your shares, you may revoke your proxy in any one of three ways:

 

   

You may submit another properly completed proxy bearing a later date, whether over the internet, by telephone or by mail;

 

   

You may send a written notice that you are revoking your proxy to the Judge of Election, Wells Fargo Shareowner Services, P.O. Box 64945, St. Paul, MN 55164; or

 

   

You may attend the special meeting and notify the election officials that you wish to revoke your proxy to vote in person. Simply attending the special meeting will not, by itself, revoke your proxy.

If your shares are held by your broker or bank as a nominee or agent, you will have to follow the instructions provided by your broker or bank to revoke your proxy.

If your shares are held in any employee benefit plan, you must follow the specific instructions provided to you by the plan trustee to revoke any voting instructions you have already provided to the trustee.

If you have questions about how to vote or change your vote, you should contact the Judge of Election, Wells Fargo Shareowner Services, P.O. Box 64945, St. Paul, MN 55164.

Shares Held in Name of Broker

If your shares are held by your broker, bank or other nominee, often referred to as held in “street name”, you will receive a form from your broker, bank or other nominee seeking instruction as to how your shares should be voted. You should contact your broker, bank or other nominee with questions about how to provide or revoke your instructions.

 

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Shares Held in Heinz’s Employee Benefit Plans

Shares held in a benefit plan that you are entitled to vote will be voted by the plan trustee pursuant to your instructions using the voting instruction card provided by the trustee or following the other instructions provided by the trustee. You should contract your plan trustee with questions about how to provide or revoke your instructions.

Tabulation of Votes

The votes will be counted by the Judge of Election appointed for the special meeting.

Solicitation of Proxies

The Heinz Board is soliciting your proxy, and Heinz will bear the cost of soliciting proxies. MacKenzie Partners, Inc. has been retained to assist with the solicitation of proxies. MacKenzie Partners, Inc. will be paid approximately $25,000 and will be reimbursed for its reasonable out-of-pocket expenses for these and other advisory services in connection with the special meeting. Solicitation initially will be made by mail. Forms of proxies and proxy materials may also be distributed through brokers, custodians and other like parties to the beneficial owners of shares of Heinz common stock, in which case these parties will be reimbursed for their reasonable out-of-pocket expenses. Proxies may also be solicited in person or by telephone, facsimile, electronic mail, or other electronic medium by MacKenzie Partners, Inc. or, without additional compensation by certain of Heinz’s directors, officers and employees.

Adjournment

In addition to the proposal to approve and adopt the merger agreement and the named executive officer merger-related compensation proposal, Heinz shareholders are also being asked to approve a proposal that will give the Heinz Board authority to, as permitted under the terms of the merger agreement, adjourn the special meeting for the purpose of soliciting additional proxies in favor of the proposal to approve and adopt the merger agreement if there are not sufficient votes at the time of the special meeting to approve and adopt the merger agreement. If this proposal is approved, the special meeting could be adjourned by the Heinz Board as permitted under the terms of the merger agreement. In addition, the Heinz Board, as permitted under the terms of the merger agreement, could postpone the meeting before it commences, whether for the purpose of soliciting additional proxies or for other reasons. If the special meeting is adjourned for the purpose of soliciting additional proxies, shareholders who have already submitted their proxies will be able to revoke them at any time prior to their use. If you return a proxy and do not indicate how you wish to vote on any proposal, or if you indicate that you wish to vote in favor of the proposal to approve and adopt the merger agreement but do not indicate a choice on the adjournment proposal, your shares will be voted in favor of the adjournment proposal. But if you indicate that you wish to vote against the proposal to approve and adopt the merger agreement, your shares will only be voted in favor of the adjournment proposal if you indicate that you wish to vote in favor of that proposal.

If a quorum does not exist, the holders of a majority of the shares of Heinz common stock present at the special meeting, in person or by proxy, may adjourn the special meeting to another place, date or time. If a quorum exists, but there are not enough affirmative votes to approve and adopt the merger agreement, the special meeting may be adjourned by the affirmative vote of a majority of the votes cast at the special meeting.

The Heinz Board unanimously recommends a vote “FOR” the adjournment proposal.

Other Information

You should not return your stock certificate or send documents representing Heinz common stock with the proxy card. If the merger is completed, the paying agent for the merger will send you a letter of transmittal and instructions for exchanging your shares of Heinz common stock for the merger consideration.

 

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THE MERGER (PROPOSAL 1)

The discussion of the merger in this proxy statement is qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement as Annex A-1 and Annex A-2 and incorporated by reference into this proxy statement.

Effects of the Merger

Pursuant to the terms of the merger agreement, at the effective time of the merger, Merger Sub will be merged with and into Heinz, with Heinz surviving the merger as a wholly owned subsidiary of Parent.

At the effective time of the merger, each outstanding share of Heinz common stock (other than any shares held by Heinz, Parent, Merger Sub or any other subsidiary of Parent or Heinz) will be automatically converted into the right to receive $72.50 in cash, without interest and less any applicable withholding taxes.

At the effective time of the merger, each option to purchase shares of Heinz common stock, whether vested or unvested, will be cancelled and exchanged into the right to receive an amount in cash equal to the spread value of the option, without interest and less any applicable withholding taxes. The spread value will equal the merger consideration of $72.50 per share minus the exercise price of the option, multiplied by the number of shares subject to the option.

Each outstanding phantom share unit relating to Heinz common stock, whether vested or unvested, will be converted into the right to receive $72.50 in cash, without interest and less any applicable withholding taxes.

Each RSU, other than certain RSUs, relating to Heinz common stock, whether vested or unvested, will be cancelled and exchanged into the right to receive $72.50 in cash, and accrued and unpaid dividend equivalents with respect to each RSU will be cashed out; provided that payment in respect of RSUs that have been deferred will be made in accordance with the terms of the applicable award and the applicable deferral election and payment in respect of retention RSUs, or portions thereof, that vest in accordance with the terms of the applicable award, will be made in accordance with such terms in an amount as determined above. All payments will be in cash, without interest and less any applicable withholding taxes.

Effects on Heinz if the Merger Is Not Completed

If the merger agreement is not adopted by Heinz shareholders or if the merger is not completed for any other reason, Heinz shareholders will not receive any payment for their shares in connection with the merger. Instead, Heinz will remain an independent public company. In addition, if the merger is not completed, Heinz expects that management will operate Heinz’s business in a manner similar to that in which it is being operated today and that Heinz shareholders will continue to be subject to the same risks and opportunities to which they are currently subject, including, without limitation, risks related to the highly competitive industry in which Heinz operates and adverse economic conditions.

Furthermore, if the merger is not completed, and depending on the circumstances that would have caused the merger not to be completed, it is likely that the price of Heinz’s common stock will decline significantly. If that were to occur, it is uncertain when, if ever, the price of Heinz’s common stock would return to the price at which it trades as of the date of this proxy statement.

Accordingly, if the merger is not completed, there can be no assurance as to the effect of these risks and opportunities on the future value of your shares of Heinz’s common stock. If the merger is not completed, the Heinz Board will continue to evaluate and review Heinz’s business operations, properties, dividend policy and capitalization, among other things, make such changes as are deemed appropriate and continue to seek to identify strategic alternatives to enhance shareholder value. If the merger agreement is not adopted by Heinz shareholders or if the merger is not completed for any other reason, there can be no assurance that any other transaction acceptable to Heinz will be offered or that Heinz’s business, prospects or results of operation will not be adversely impacted.

 

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In addition, if the merger agreement is terminated, under specified circumstances, Heinz would be required to pay Parent a termination fee in an amount equal to $750 million. The merger agreement also provides that parent will be required to pay Heinz a reverse termination fee equal to $1.4 billion upon termination under certain specified circumstances. See “The Merger Agreement—Termination Fee Payable by Heinz” and “The Merger Agreement—Termination Fee Payable by Parent” beginning on pages [] and [], respectively, of this proxy statement.

Background of the Merger

As part of the ongoing evaluation of Heinz’s business, Heinz’s senior management and the Heinz Board periodically review, consider and assess the company’s operations, financial performance and industry conditions as they may affect Heinz’s long-term strategic goals and plans, including the consideration of potential opportunities for business combinations, acquisitions and other financial and strategic alternatives.

In early December 2012, Jorge Paulo Lemann, Partner and Co-Founder of 3G Capital, met with Mr. Warren Buffett, the Chairman of the Board of Directors and Chief Executive Officer of Berkshire Hathaway and proposed to Mr. Buffett that 3G Capital and Berkshire Hathaway jointly acquire Heinz. Shortly thereafter, Mr. Buffet responded that Berkshire Hathaway was supportive of a transaction and would be willing to provide the equity financing for a transaction of the kind and in approximately the amount that was ultimately provided by Berkshire Hathaway. Mr. Lemann and Mr. Buffett had known each other professionally and socially for many years.

On December 13, 2012, representatives of Lazard Frères & Co. LLC (“Lazard”), financial advisor to 3G Capital, telephoned William R. Johnson, Chairman, President and CEO of Heinz, and requested a meeting for 3G Capital with Mr. Johnson in order to share their views on the food and beverage industry. Mr. Johnson agreed to meet with representatives of 3G Capital for dinner on December 18, 2012.

On December 18, 2012, Mr. Johnson had dinner with Mr. Lemann and Alexandre Behring, Managing Partner of 3G Capital. During dinner, Messrs. Johnson, Lemann and Behring discussed, among other things, the food and beverage industry generally, potential industry consolidation and their respective businesses. No proposal for a business transaction was made during this dinner. At the conclusion of the dinner, Messrs. Johnson, Lemann and Behring agreed to continue their discussion of the industry and their respective businesses after the New Year.

On January 10, 2013, Messrs. Behring and Johnson met again in Pittsburgh, Pennsylvania. During this meeting, Mr. Behring informed Mr. Johnson that 3G Capital, together with Berkshire Hathaway, was interested in discussing the potential acquisition of Heinz and intended to make an acquisition proposal. Mr. Behring did not specify a proposed price or other significant terms of an acquisition proposal, but indicated that he was prepared to deliver a proposal letter shortly. Mr. Johnson informed Mr. Behring that Heinz was not for sale, but that he would inform the Heinz Board of Mr. Behring’s statements and present any proposal to acquire Heinz to the Heinz Board for its consideration. Mr. Johnson noted that the Heinz Board had a regularly scheduled meeting to be held the following week and that, if there was a specific proposal, it would best be communicated in writing.

Later on January 10, 2013, Mr. Johnson telephoned Thomas J. Usher, the presiding independent director of Heinz, and informed him of 3G Capital’s stated intention to submit a proposal for 3G Capital and Berkshire Hathaway to acquire Heinz. Messrs. Johnson and Usher agreed that they would include the proposed interest by 3G Capital and Berkshire Hathaway and the possibility that Heinz might receive an acquisition proposal from 3G Capital and Berkshire Hathaway among the topics to be discussed at the upcoming meeting of the Heinz Board.

Also on January 10, 2013, Mr. Johnson and other members of Heinz management contacted Centerview Partners LLC (“Centerview”), financial advisor to Heinz, and Davis Polk & Wardwell LLP (“Davis Polk”), outside legal counsel to Heinz, and informed them of the potential interest expressed by 3G Capital and the possibility that Heinz might receive an acquisition proposal.

 

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On January 14, 2013, Berkshire Hathaway and 3G Capital (which are together referred to in this proxy statement as the Investors) delivered a joint letter to Mr. Johnson which contained a non-binding proposal by Berkshire Hathaway and 3G Capital to acquire Heinz for $70.00 in cash per share for all of the outstanding shares of Heinz common stock. The letter stated, among other things, that equity capital to be provided by the Investors would comprise more than 50% of the funds necessary to complete the merger and refinance existing indebtedness and that the Investors were highly confident that they would be able to finalize debt financing commitments promptly and successfully. The letter also noted that the Investors’ proposal was conditioned on, among other things, customary due diligence, which the Investors believed could be completed within weeks, and the satisfactory negotiation of transaction documentation. In addition, the letter indicated that the Investors had the highest respect for Heinz’s Pittsburgh, Pennsylvania heritage.

On January 15-16, 2013, the Heinz Board held a regularly scheduled meeting at which all directors were present. At the beginning of the meeting on January 15, 2013, Messrs. Johnson and Usher reviewed with the Heinz Board the Investors’ proposal to acquire Heinz. Representatives of Centerview provided preliminary financial analysis and data regarding Heinz, the Investors’ proposal, the Investors’ respective businesses and precedent transactions in the food and beverage industry. The Heinz Board then discussed with members of Heinz’s management and Heinz’s advisors the potential opportunities and considerations presented by a potential sale of Heinz to the Investors or other potential acquirers and associated with Heinz continuing to operate as an independent company. The Heinz Board, Heinz’s management and Heinz’s advisors discussed the risks associated with Heinz’s business on a standalone basis, including a number of generally unfavorable macroeconomic trends impacting Heinz’s business (e.g., lower international gross domestic product growth (particularly in Europe), relatively high unemployment, continuing volatility in the costs of commodities and other input costs and increased private label penetration), the sustainability of Heinz’s current tax rate, the impact of currency fluctuations on Heinz’s financial performance and the sufficiency of Heinz’s domestic cash flow to support Heinz’s quarterly dividend. Heinz’s financial advisors reviewed various alternatives to the Investors’ proposal, including the possibility of a business combination transaction with certain counterparties other than the Investors, including financial investors and other companies in the food and beverage industry. Representatives of Davis Polk reviewed with the Heinz Board its fiduciary duties applicable to its consideration of the Investors’ proposal and other strategic alternatives. The Heinz Board then engaged in extensive discussions with members of Heinz’s management and Heinz’s advisors regarding the Investors’ proposal and whether it was in the best interests of Heinz shareholders to engage in discussions going forward. The Heinz Board also discussed the financial capacity and likely interest of other potential acquirers and the risks of assessing the interest of other parties prior to signing a definitive agreement if the Heinz Board were to determine that it was in the best interest of Heinz to enter into a definitive agreement with the Investors. In particular, the Heinz Board, Heinz’s management and Heinz’s advisors discussed the risks that, were the industry or market to believe that Heinz was considering a potential sale, such a leak could cause substantial harm to Heinz’s business, including its relationships with customers and suppliers and its ability to retain and attract employees. The Heinz Board also discussed the impact of a potential sale of Heinz on the city of Pittsburgh, Pennsylvania, as well as whether the Investors would be willing to provide a commitment to maintaining Heinz’s presence and heritage in Pittsburgh, Pennsylvania, which commitment was considered important to the Heinz Board. Also during the meeting, Mr. Johnson confirmed that there had been no discussions between the Investors and Heinz’s management team regarding the role, if any, of the management team following consummation of a potential sale of Heinz.

At an executive session of the Heinz Board meeting held on January 16, 2013, at the recommendation of management, the Heinz Board unanimously authorized Heinz to retain each of Centerview and Merrill Lynch, Pierce, Fenner and Smith Incorporated (“BofA Merrill Lynch”) as its financial advisors in connection with the Investors’ proposal. The Heinz Board authorized the retention of Centerview and BofA Merrill Lynch based on their respective qualifications, expertise, reputation and experience in mergers and acquisitions and financings and because of their familiarity with, and performance in prior engagements for, Heinz (see “—Opinions of Heinz’s Financial Advisors” beginning on page [] of this proxy statement). During the executive session, the Heinz Board, in light of the potential for rapid and frequent developments in any discussions with the Investors,

 

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unanimously decided to form a transaction committee comprised of independent members of the Heinz Board (the “Transaction Committee”) to provide tactical and strategic advice to the full Heinz Board and Heinz’s management and to provide recommendations to the full Heinz Board as appropriate. Edith E. Holiday, Nelson Peltz, Dennis H. Reilly and Mr. Usher were designated by the Heinz Board to serve on the Transaction Committee. The Heinz Board unanimously authorized the committee to retain a separate financial advisor and legal counsel in order to provide additional perspectives and advice on the proposal from the Investors.

At the conclusion of the Heinz Board meeting, in order to aid in the Heinz Board’s consideration of the Investors’ proposal, the Heinz Board unanimously directed Heinz management to update Heinz’s strategic plan for the Heinz Board’s review. The Heinz Board also unanimously directed Mr. Johnson to inform the Investors that the Heinz Board was considering their proposal to acquire Heinz but that the Heinz Board had made no decision with respect to the proposal or whether to authorize further discussions.

Following the conclusion of the Heinz Board meeting, a meeting of the Transaction Committee was held in person, with all members of the committee in attendance. The committee appointed Mr. Usher as its chair, discussed potential legal and financial advisors and instructed Mr. Usher to contact potential advisors.

On January 16, 2013, following the conclusion of the Heinz Board meeting, Mr. Johnson telephoned Mr. Behring and informed him that the Heinz Board was considering the Investors’ proposal but that the Heinz Board had made no decision with respect to that proposal or whether to authorize further discussions. During this call, Mr. Behring indicated that he intended to contact a limited number of financial institutions to be able to provide greater certainty to the Heinz Board about the Investors’ ability to finance the proposal. On January 18, 2013, a representative of Centerview communicated to Mr. Behring and a representative of Lazard the same message that Mr. Johnson had communicated to Mr. Behring on January 16, 2013. During their conversation, Lazard indicated to the Centerview representative that the Investors believed that their proposal represented full and fair value for Heinz, that the Investors do not typically negotiate price after making an initial offer and did not expect to do so here, and that, accordingly, Heinz should not expect the Investors to increase the price they were willing to pay above $70.00 per share.

From January 16, 2013 through January 20, 2013, at the direction of the Heinz Board, Heinz management updated Heinz’s strategic plan, including management’s projections for Heinz’s future financial performance. The projections were updated in a manner consistent with Heinz’s management’s historical practices for preparing projections.

On January 20, 2013, Mr. Usher spoke to each member of the Transaction Committee individually, informed him or her that Moelis & Company LLC (“Moelis”) and Wachtell, Lipton, Rosen & Katz (“Wachtell”) were available to advise the committee and scheduled an in-person meeting of the committee for January 22, 2013. The Transaction Committee retained Moelis and Wachtell as its financial advisor and legal counsel, respectively. The Transaction Committee selected Moelis as its financial advisor in connection with the merger because Moelis has substantial experience in similar transactions and is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings and valuations for corporate and other purposes.

On January 21, 2013, the Heinz Board held a special meeting by telephone, with all directors in attendance. At the meeting, Heinz’s management and Heinz’s financial advisors, Centerview and BofA Merrill Lynch, based on materials provided to the Heinz Board in advance, presented to the Heinz Board a review of Heinz’s current business outlook and management’s updated strategic plan (the “strategic plan”), which strategic plan included the financial projections described under “—Certain Financial Projections” beginning on page [] of this proxy statement, in order to provide the Heinz Board with the most recent information available to Heinz’s management. The Heinz Board discussed the business outlook and strategic plan with Heinz’s management and

 

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advisors, including the modeling assumptions and risks associated with executing the strategic plan. The Heinz Board and management discussed the likelihood of achieving the company’s strategic plan, as well as the challenges facing the company and the industry more generally. In particular, the Heinz Board considered the risks that the company might not be able to achieve its strategic plan due to less favorable macroeconomic conditions, including lower than expected U.S. and international gross domestic product growth (particularly in Europe), relatively high unemployment, continuing volatility in the costs of commodities and other input costs and increased private label penetration. The Heinz Board also considered Heinz’s ability to successfully execute its acquisitions strategy, the impact of future tax rates and currency fluctuations on Heinz’s ability to execute its strategic plan and the challenges of growing its business in mature and developed markets.

Centerview and BofA Merrill Lynch reviewed with the Heinz Board, among other matters, Heinz’s positioning relative to its peers in the food and beverage industry, preliminary financial analyses of Heinz based on various methodologies, and a review of the Investors’ proposal and other potential strategic alternatives available to Heinz. The Heinz Board discussed with Heinz’s management and advisors the likelihood of any potential acquirers of Heinz other than the Investors, including both financial sponsors and potential strategic acquirers, being interested in, and capable of, an acquisition of Heinz. Heinz’s financial advisors advised the Heinz Board that they did not believe that any other financial sponsors possessed the financial capacity to finance an acquisition of Heinz with an equity component the size of that proposed by the Investors, that, in their views, the financing markets would not support a transaction with a smaller equity component at a financing cost that would allow competing financial sponsors to generate acceptable returns, and that, in their views, any acquisition with a larger debt financing component would introduce greater risk to Heinz that changes in the debt financing markets would interfere with consummation of an acquisition. Heinz’s financial advisors noted that only a few strategic companies in the food and beverage industry possessed the financial capacity to acquire a company the size of Heinz and that, for various reasons, including those companies’ publicly disclosed acquisition strategies and the financial advisors’ views of the strategic fit between Heinz and those companies, those companies were unlikely to be realistic candidates to acquire Heinz. Also during this meeting, Davis Polk reviewed with the Heinz Board its fiduciary duties.

The Heinz Board and its advisors discussed and considered the merits and considerations of various forms of a potential “market check” to assess the interest of potential alternative buyers, were the Heinz Board ultimately to conclude that the proposal by the Investors was sufficiently attractive for the Heinz Board to consider pursuing a sale of Heinz. The Heinz Board discussed its concerns that any “market check” could result in public leaks of the sales process, which could cause the Investors to withdraw their proposal and could also have an adverse impact on employees, customers and suppliers. The representatives of Centerview and BofA Merrill Lynch also discussed the possible reaction of potential alternative buyers to a pre-signing market check and the relative benefits and risks of a pre-signing market check compared with a passive post-signing market check and “fiduciary out” with a customary termination fee payable by Heinz if Heinz were to terminate a merger agreement with the Investors and enter into an alternative transaction with another buyer. The representatives of Centerview and BofA Merrill Lynch expressed their view that a customary termination fee would not preclude a serious and financially able potential buyer from seeking to acquire Heinz and discussed with the Heinz Board whether Heinz’s solicitation of alternative acquisition proposals prior to entering into an agreement with the Investors would likely cause the Investors to withdraw their proposal. The Heinz Board also discussed whether the Investors would provide a commitment to maintaining Heinz’s presence and heritage in Pittsburgh, Pennsylvania, which commitment was considered important to the Heinz Board. Following these deliberations, the Heinz Board unanimously concluded that, while it had reached no decision regarding the potential sale of Heinz, Heinz’s management and advisors should request that the Investors improve the financial terms of their proposal. The Heinz Board unanimously directed Mr. Johnson and Heinz’s advisors to inform the Investors that, while the Heinz Board had not yet made a decision as to how to respond to the Investors’ proposal, the Heinz Board was unlikely to be willing to authorize further discussions unless the Investors improved the financial terms of their proposal.

 

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On January 22, 2013, a representative of Centerview spoke with Mr. Behring and a representative of Lazard and informed them that the Heinz Board had not yet made a decision as to how to respond to the Investors’ proposal, but that the Heinz Board was unlikely to be willing to authorize further discussions unless the Investors improved the financial terms of their proposal. Mr. Behring responded that the Investors would consider the request but referred again to the full and fair price being offered. Later that day, Mr. Johnson telephoned Mr. Behring and reiterated the message that the Investors should improve the financial terms of the proposal if they wanted the Heinz Board to authorize further discussions. Following that call, Mr. Johnson updated Mr. Usher on the communications with Mr. Behring.

Also on January 22, 2013, a meeting of the Transaction Committee was held in person. All members of the committee were present, as were representatives from the committee’s financial advisor, Moelis, and legal counsel, Wachtell. At the meeting, Mr. Usher reviewed with representatives of Moelis and Wachtell the Investors’ proposal to acquire Heinz. The Transaction Committee then discussed with its advisors the prior discussions with the Investors (noting that there had been no discussions between the Investors and Heinz’s management team regarding the role, if any, of the management team following consummation of a potential sale of Heinz), the available options and considerations presented by a potential sale of Heinz to the Investors or other potential acquirers and associated with Heinz continuing to operate as an independent company. The Transaction Committee also discussed the financial capacity and likely interest of other potential acquirers and the benefits and considerations of a pre-signing market check process. In addition, the Transaction Committee and its advisors discussed the Transaction Committee’s role in a potential transaction with the Investors, as described above, and the timing of any potential transaction. As an aid to the work of its advisors, the Transaction Committee provided its advisors with the Transaction Committee’s views as to, among other things, a number of generally unfavorable macroeconomic trends impacting Heinz’s business, including the trends discussed at the prior meetings of the Heinz Board. Wachtell reviewed with the members of the Transaction Committee their fiduciary duties.

On January 24, 2013, representatives of Centerview and Lazard spoke. During their conversation, Lazard advised Centerview that the Investors would be sending over a revised proposal to acquire Heinz. Centerview informed Lazard that the Investors should provide their best offer. Also on January 24, 2013, Mr. Behring telephoned Mr. Johnson and advised Mr. Johnson that the Investors would submit a revised proposal to acquire Heinz later that day and that the revised proposal represented the Investors’ “best and final” offer. Mr. Behring advised Mr. Johnson that, were the Heinz Board unwilling to proceed on the basis of the revised price proposed, then the Investors would be unwilling to consider further an acquisition of Heinz.

Later on January 24, 2013, the Investors delivered a letter to Mr. Johnson containing a revised non-binding proposal to acquire Heinz for $72.50 in cash per share for all of the outstanding shares of Heinz common stock, an increase of $2.50 per share from the Investors’ initial proposal. The $72.50 per share proposal represented a premium of 19.6% to Heinz’s closing share price of $60.64 on January 24, 2013 and a premium of 23.3% to Heinz’s average closing share price of $58.80 for the previous 30 days. The letter also indicated that the Investors had already engaged financing institutions to provide debt financing and that the Investors were prepared to perform confirmatory due diligence and finalize contractual terms and financing commitments expeditiously. In addition, the letter contained a statement that the Investors would, following the consummation of a transaction, build upon Heinz’s Pittsburgh, Pennsylvania heritage. Mr. Johnson contacted Mr. Usher to communicate the revised proposal by the Investors. Following the delivery of the letter, each of Mr. Johnson and a representative of Centerview called Mr. Behring and asked for more information on the equity financing and debt financing for the proposed transaction and a better understanding of its terms.

Also on January 24, 2013, the Transaction Committee had a telephonic meeting, with all members of the committee in attendance. At the meeting, Mr. Usher updated the other members of the Transaction Committee on developments relating to the Investors’ proposal.

On January 25, 2013, the Heinz Board held a special meeting by telephone, with all directors in attendance. At the meeting, Messrs. Johnson and Usher updated the Heinz Board on the revised proposal received from the

 

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Investors, and Mr. Johnson and a representative of Centerview described the conversations with the Investors and a representative of Lazard leading up to receipt of the revised proposal during which the Investors had indicated that the terms of the revised proposal would represent the Investors’ “best and final” offer with respect to price. Based on materials provided to the Heinz Board in advance, representatives of Centerview and BofA Merrill Lynch then presented to the Heinz Board a preliminary financial analysis of the revised proposal. The Heinz Board discussed potential responses to the revised proposal. Noting that Moelis was preparing a separate analysis of the proposed transaction which would be ready the following week, the Heinz Board unanimously elected to postpone any determination as to how to respond to the proposal until Moelis had completed its analysis and presented its analysis to the Heinz Board.

On January 30, 2013, the Transaction Committee held a telephonic meeting. At the meeting, representatives of Moelis discussed the Investors’ proposal with the Transaction Committee, including, based on materials provided to the Transaction Committee in advance, a review of the Investors’ revised proposal, a review of Heinz’s strategic plan, a preliminary financial analysis of Heinz and an analysis of potential other acquirers of Heinz. With respect to other potential acquirers, representatives of Moelis noted that recent acquisitions by financial sponsors involved an equity commitment far less than that contemplated by the Investor’s proposal and that representatives of Moelis agreed with the views previously expressed by representatives of Centerview and BofA Merrill Lynch with respect of the unlikelihood of interest of strategic acquirers in an acquisition of Heinz.

Immediately following that meeting, on January 30, 2013, a meeting of the Heinz Board was held by telephone, with all directors in attendance. At the meeting, representatives of Moelis, based on materials provided to the Heinz Board in advance, discussed with the Heinz Board the matters referred to above that were discussed with the Transaction Committee. Representatives of Davis Polk next reviewed with the Heinz Board its fiduciary duties. The Heinz Board again discussed the risks associated with executing Heinz’s strategic plan and with remaining as a standalone company, as compared to the benefits of the $72.50 proposal from the Investors. While the Heinz Board did not reach a final decision with respect to the proposal, it preliminarily and unanimously concluded that the proposal represented an attractive opportunity compared to other available alternatives (including remaining a standalone company) and that it would be in the best interests of Heinz shareholders and other constituencies to continue discussions with the Investors on the basis of the $72.50 per share proposal. The Heinz Board then unanimously directed Mr. Johnson to inform the Investors that the Heinz Board was authorizing Heinz to engage in further discussions with the Investors with respect to their proposal at the price of $72.50 per share, including the negotiation of definitive documentation and the making available of non-public information for due diligence purposes, subject to the Investors entering into an acceptable confidentiality agreement. The Heinz Board also discussed the timing of any potential transaction, concluding that, if it ultimately were to proceed with a sale of the company to the Investors, it would be prudent to seek to complete negotiations and enter into a definitive agreement expeditiously in light of the harm that a leak of information could have on Heinz and, in addition, it would be desirable to announce the transaction in advance of the release of Heinz’s financial results for the third quarter of fiscal year 2013, which was scheduled to take place on or about February 26, 2013, and in advance of the Consumer Analyst Group of New York’s annual conference, which was scheduled to begin on February 21, 2013 and at which Heinz was scheduled to present.

Later on January 30, 2013, Mr. Johnson telephoned Mr. Behring and communicated the messages described by the Heinz Board above. Mr. Johnson also advised Mr. Behring that the Heinz Board expected that, if an agreement were to be reached, any transaction would be announced by February 21, 2013. Mr. Behring responded that the Investors also expected that the negotiation of a transaction should be completed expeditiously so as to minimize the risk of public leaks. Following that conversation, Davis Polk sent to Lazard, to be forwarded to Kirkland & Ellis LLP (“Kirkland & Ellis”), legal counsel to 3G Capital, a draft confidentiality agreement to be entered into by each of the Investors.

From January 31, 2013 through February 13, 2013, Mr. Johnson continued to regularly update Mr. Usher, as Transaction Committee chair, regarding developments relating to the proposed transaction with the Investors,

 

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and Mr. Usher in turn updated the other members of the Transaction Committee on those developments. Mr. Usher kept representatives of Wachtell and Moelis apprised of those developments and Wachtell and Moelis gave advice to Mr. Usher.

On January 31, 2013, representatives of Davis Polk and Kirkland & Ellis had a conference call to discuss the terms of the confidentiality agreement and a potential transaction structure generally. During the call, Kirkland & Ellis stated that the Investors expected that the merger would be structured in a manner typical for financial buyers, meaning that, while there would be no financing condition, if the merger ultimately was not consummated due to a failure of the financial institutions who had agreed to provide debt financing to provide that financing, then Heinz’s remedies would be limited to receipt of a reverse termination fee (which structure is referred to as the private equity sponsored leveraged buyout structure). On this call, Davis Polk indicated that Heinz did not expect to bear any risk for any failure in the Investors’ financing to be obtained and suggested that the Investors arrange for certain funds to serve as a backup alternative to their financing, if necessary, to assure Heinz, its shareholders and the Investors that the financing would be obtained.

Following the call, Kirkland & Ellis sent Davis Polk a revised draft of the confidentiality agreement. Over the next day, Heinz and 3G Capital, with the assistance of their advisors, negotiated the terms of the confidentiality agreement. Over the course of these negotiations, the parties agreed to execute two separate confidentiality agreements, one for each of 3G Capital and Berkshire Hathaway. On February 1 and 2, 2013, 3G Capital and Berkshire Hathaway, respectively, executed the confidentiality agreements, which included customary “standstill” provisions prohibiting each of the Investors from acquiring shares of Heinz common stock or taking certain other actions and prohibiting the Investors from sharing confidential information with financial institutions that were not preapproved by the Heinz Board.

Also on February 1, 2013, Lazard, on behalf of the Investors, sent to Centerview a proposed term sheet for the certain terms of the proposed transaction. The term sheet contemplated that Heinz would be subject to a “no-shop” provision that would prohibit Heinz from soliciting alternative transactions after the execution of the merger agreement and that the termination fee payable by Heinz if the merger agreement were to be terminated in certain customary circumstances relating to alternative transaction proposals, including if the merger agreement were terminated by Heinz in order to accept a superior offer, would be equal to $800 million. The term sheet also proposed that the merger agreement would follow the private equity sponsored leveraged buyout structure and that the reverse termination fee payable by the Investors if the merger were not consummated due to the failure of the debt financing sources to provide that financing would be equal to $800 million (the same as the amount of the proposed termination fee), and that the Investors’ maximum liability in connection with the merger agreement would be the amount of the reverse termination fee. The term sheet also proposed that, if the merger were not consummated due to the failure of the debt financing sources to provide that financing, the Investors would have two years to seek to recover the reverse termination fee from the financing institutions before the reverse termination fee would become payable to Heinz. The term sheet provided that executed debt commitment letters from debt financing sources would be delivered in connection with the signing of the merger agreement. The term sheet also proposed that the merger agreement would include customary closing conditions (including the absence of a material adverse effect on Heinz and receipt of U.S. and foreign antitrust approvals) and customary representations, warranties and covenants.

On February 2, 2013, Centerview granted 3G Capital and its advisors access to an online data site to which Heinz and its advisors had uploaded certain public and non-public information of Heinz and to which Heinz and its advisors continued thereafter through the execution of the merger agreement to upload due diligence materials. 3G Capital’s advisors in turn sent to Heinz’s advisors a series of diligence requests for completing their due diligence process.

On February 2, 2013, Heinz’s management and advisors engaged in preliminary discussions regarding the terms set forth in the term sheet delivered on February 1, 2013. Heinz directed its advisors to communicate to the Investors, among other things, that the Investors, and not Heinz, should bear the full risk of a debt financing failure (i.e., that the merger agreement should not follow the private equity sponsored leveraged buyout structure)

 

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and that the merger agreement should include a “go-shop” provision permitting Heinz to solicit alternative acquisition proposals for a period after signing the merger agreement and to pay a lower termination fee if it terminated the merger agreement to enter into an alternative transaction solicited during that period.

Later on February 2, 2013, a conference call was held with representatives of Heinz’s and 3G Capital’s respective financial advisors and legal counsel to discuss the draft term sheet and the transaction structure generally. During the call, Davis Polk advised Kirkland & Ellis that the Investors, rather than Heinz, should bear the full risk of the debt financing not materializing, and accordingly that Heinz’s remedies if the merger failed to be consummated due to the failure of the debt financing sources to provide that financing should not be limited to receipt of a reverse termination fee. In response, Lazard and Kirkland & Ellis indicated that the Investors would be unwilling to enter into a transaction in which their liability for a debt financing failure was uncapped. Kirkland & Ellis informed Davis Polk that each of the Investors was willing to provide a several guarantee of payment of 50% of the reverse termination fee if it became payable. Davis Polk also requested that the merger agreement include a “go-shop” provision and termination fees payable by Heinz that were significantly lower than the termination fee the Investors had proposed. Kirkland & Ellis stated that the Investor would not accept a “go-shop” provision because they would not participate in an auction and that the Investors believed that a “go-shop” provision was not needed by Heinz because the small number of potential other buyers of Heinz would learn about the transaction from the announcement and would be able to submit an alternative proposal.

Also on February 2, 2013, representatives of Kirkland & Ellis confirmed to representatives of Davis Polk that the Investors would not ask Heinz management to rollover their Heinz equity into the surviving company’s capital structure and would not discuss with Heinz management potential plans regarding their employment roles, if any, at Heinz following the closing of the merger (which discussions had not previously taken place as of February 2, 2013).

On February 4, 2013, Kirkland & Ellis circulated an initial draft of the merger agreement, which was consistent with the terms set forth in the February 1, 2013 term sheet. The draft merger agreement also provided that if the merger failed to be consummated due to the failure of the debt financing sources to provide that financing, and that failure was caused by a bankruptcy event of the debt financing sources, then Heinz would not be entitled to receive the reverse termination fee and no remedies would be available to Heinz (which provision is referred to as the financing institution material adverse effect provision). The draft merger agreement also required Parent’s consent for Heinz to continue to pay its quarterly dividend after entering into the merger agreement and required each of Parent, Merger Sub and Heinz to use their respective reasonable best efforts to consummate the merger, subject to certain limitations (including that Parent and Merger Sub would not be required to agree to any divestitures or limitations on the operation of Heinz’s business), including with respect to antitrust approvals for the merger. The draft merger agreement included the obligation of the Investors to maintain Heinz’s headquarters in Pittsburgh and to continue to preserve Heinz’s heritage and support philanthropic and charitable causes in Pittsburgh and other communities in which Heinz operates.

Also on February 4, 2013, a meeting of the Management Development and Compensation Committee of the Heinz Board was held by telephone, with all members of the committee in attendance. The committee’s outside consultant, Mercer Consulting, was also in attendance and advised the committee. At the meeting, the committee considered and discussed its concerns that a potential change in control could result in significant distractions of its key management personnel and/or result in the departure of such personnel. The committee considered that the departure of key management personnel could adversely affect the consideration that any potential buyer would be willing to pay in an acquisition of Heinz and that, were Heinz to agree to a potential transaction and that transaction did not successfully close, the retention of key management personnel would be important to Heinz’s continued ability to succeed as an independent company. The committee unanimously approved the entry into severance protection agreements with four key employees (none of whom were named executive officers), which provided for certain payments to be made to such employees upon a qualifying termination within 24 months following a change of control. Severance protection agreements for executive officers of Heinz are described in “Interests of Heinz’s Executive Officers and Directors in the Merger” beginning on page [] of this proxy statement.

 

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On February 5, 2013, a management presentation was held at the New York City offices of Davis Polk, at which members of Heinz’s management gave representatives of 3G Capital and its advisors an overview of Heinz’s business, including certain management projections of Heinz’s future performance, as described under “Certain Financial Projections” beginning on page [] of this proxy statement. Later that day Messrs. Johnson and Behring met to discuss Heinz and the transaction process. After February 5, 2013 through the time of signing, breakout diligence sessions between Heinz’s management and advisors, on the one hand, and representatives of 3G Capital and its advisors, on the other hand, continued and Heinz’s management and advisors made additional due diligence material available to the 3G Capital and its advisors during that period.

On February 6, 2013, Heinz management and its advisors engaged in extensive discussions regarding the terms of the draft merger agreement circulated by Kirkland & Ellis. At the conclusion of the discussion, Heinz management directed Davis Polk to revise the merger agreement to, among other things, include a “go-shop” provision, seek a greater commitment from the Investors on their obligations with respect to efforts to obtain the antitrust approvals necessary to complete the transaction, permit Heinz to continue to pay its quarterly dividend, strengthen the Investors’ commitment to Pittsburgh, Pennsylvania and delete the financing institution material adverse effect provision.

On February 7, 2013, Davis Polk sent Kirkland & Ellis a revised draft of the merger agreement. In the revised agreement, Davis Polk proposed a 40-day “go-shop” period with a reduced termination fee payable by Heinz if Heinz terminated the merger agreement to enter into an alternative transaction with a counterparty who was contacted during the “go-shop” period. The draft circulated by Davis Polk reserved comment on the remedies for a debt financing failure proposed in Kirkland & Ellis’s initial draft (including the reverse termination fee), and proposed that the termination fee payable by Heinz would be lowered from the Investor’s initial proposal of $800 million to an unspecified amount. The draft also provided that Heinz would be permitted to continue to pay its quarterly dividend through closing and that the Investors would agree to take any actions necessary in order to obtain the required antitrust approvals for the transaction that did not constitute a material adverse effect. Prior to circulating the draft, Davis Polk highlighted the most significant revisions in a call with Kirkland & Ellis. In particular, on this call, Davis Polk noted that it was not authorized to negotiate any aspect of the merger agreement that would limit Heinz’s remedies, including the private equity sponsored leveraged buyout structure proposed by the Investors.

Also on February 7, 2013, Kirkland & Ellis sent Davis Polk an initial draft of the debt commitment letter to be entered into by the financing institutions that would provide debt financing in connection with the potential transaction.

On February 8, 2013, representatives of Davis Polk and Kirkland & Ellis had a conference call to continue negotiations concerning the merger agreement. During the call, Kirkland & Ellis noted that the Investors were willing to accede to Heinz’s request that Heinz be permitted to pay regular quarterly dividends prior to closing of the Merger. Kirkland & Ellis noted that, while Heinz had reserved comment on the remedies for a debt financing failure proposed by Kirkland & Ellis in the initial draft of the merger agreement, the Investors’ willingness to enter into a transaction was conditioned on Heinz’s remedies in those circumstances being limited to receipt of a reverse termination fee. Kirkland & Ellis noted, however, that the Investors would withdraw their initial proposal that Heinz would not be entitled to any remedies if the merger were not consummated due to a failure of the debt financing that resulted from a bankruptcy of those financing sources. In addition, Kirkland & Ellis stated that they expected that the Investors would be willing by their guarantees to guarantee liabilities of Parent and Merger Sub under the merger agreement (including liabilities for breach of the merger agreement) up to a cap on liability equal to the reverse termination fee if it became payable (as the Investors had previously proposed). Kirkland & Ellis also reiterated that the Investors were unwilling to agree to a “go-shop” provision but confirmed that they were willing to accept a customary “no-shop” provision with a fiduciary out, which would allow the Heinz Board, subject to certain conditions, to accept a superior offer made following the announcement of the merger agreement. Davis Polk suggested that, in lieu of a “go-shop” provision, Heinz might consider a two-tiered termination fee, with a lower fee payable by Heinz if it terminated the merger agreement to enter into an

 

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alternative transaction within a limited period of time post-signing. Kirkland & Ellis responded that, while the Investors might have some flexibility on the size of the termination fee, the Investors would not accept a two-tiered fee. Finally, Kirkland & Ellis noted that the standard for efforts to obtain antitrust approvals proposed in the most recent draft of the merger agreement was too onerous in light of the circumstances, but that the Investors would agree not to acquire other food manufacturers during the period prior to closing of the merger if doing so would interfere with obtaining antitrust approvals.

Also on February 8, 2013, during a call between representatives of Lazard and Centerview, Lazard, on behalf of the Investors, proposed that, in light of the progress that had been made in the due diligence process and in order to lessen the risk of public leaks that discussions were taking place concerning a possible transaction, the parties should consider accelerating the signing timeline, to perhaps as early as the morning of February 12, 2013. The parties agreed later that day to target a signing date of February 13, 2013, with the transaction to be announced before the financial markets opened on February 14, 2013, subject to the negotiation of acceptable transaction documents and the final approval of the parties (including the approval of the Heinz Board).

On February 9, 2013, Kirkland & Ellis sent Davis Polk a revised draft of the merger agreement, as well as initial drafts of the equity commitment letters, pursuant to which the Investors would commit to provide certain equity funding in order to consummate the transaction, and initial drafts of the limited guarantees, pursuant to which each of the Investors would severally guarantee the payment of 50% of the reverse termination fee and certain other amounts. The draft merger agreement again contained the Investors’ preferred limitation on the remedies available to Heinz in the event of a debt financing failure and also reverted to the Investors’ original position that the Investors would not be obligated to agree to any divestitures or limitations on the operation of Heinz’s business in order to obtain antitrust approvals but added the limitation on food manufacturer acquisitions referred to above. The amount of the termination fee and reverse termination fee were unspecified.

On the evening of February 9, 2013, representatives of Centerview and Lazard spoke. The Lazard representative reiterated that the Investors would not be willing to enter into a transaction in which their potential liability for a failure of the debt financing sources to provide the debt financing was not capped (i.e., a transaction that did not follow the private equity sponsored leverage buyout structure). In response, the Centerview representative indicated that Heinz might be willing to accept the private equity sponsored leveraged buyout structure and limit the remedies available to Heinz in the event of a failure of the debt financing sources to provide the debt financing to the receipt of a reverse termination fee, but that, in order to provide Heinz with adequate closing certainty, the reverse termination fee would have to be considerably larger than the $800 million initially proposed by the Investors. The Centerview representative proposed that the reverse termination fee be $2 billion and be payable promptly after a termination of the merger agreement (rather than after two years as was proposed by the Investors). In response, the Lazard representative noted that a reverse termination fee of that size would be far outside the range of what is customary and that the Investors might elect not to proceed with the negotiation of the transaction if Heinz insisted on a reverse termination fee of that size, but he indicated that he would discuss the issue with the Investors.

On February 10, 2013, representatives of Davis Polk and Kirkland & Ellis met for a negotiating session at Davis Polk’s New York City offices, with Munger Tolles & Olson LLP (“Munger Tolles”), legal counsel to Berkshire Hathaway, participating by teleconference. During the session, the parties discussed several open issues in the merger agreement, including, among other matters, the circumstances under which the termination fee would be payable by Heinz, the standard to which Heinz would be held in complying with the proposed “no-shop” provision, including the exercise of any termination rights in the context of a superior proposal, Heinz’s rights under the Investors’ equity commitment letters and limited guarantees, the scope of certain of the closing conditions, the scope of the representations and warranties and the interim operating covenants. Kirkland & Ellis and Munger Tolles communicated to Davis Polk that the Investors would be willing to agree to some amount of divestitures or limitations on the operation of Heinz’s business in order to obtain antitrust approvals, though the parties did not agree on how to define the actions to be required.

 

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Also on February 10, 2013, representatives of Lazard, Centerview, Kirkland & Ellis and Davis Polk had a separate discussion during which Heinz’s financial advisors stated that, if the Heinz Board were to agree to the private equity sponsored leveraged buyout structure, the reverse termination fee payable by the Investors would need to be equal to $1.8 billion (and would be payable promptly upon termination of the merger agreement) and the termination fee payable by Heinz would be equal to $600 million.

Later on February 10, 2013, the Heinz Board held a special meeting by telephone at which all directors were in attendance. During the meeting, Heinz’s management and advisors reviewed with the Heinz Board the status of discussions with the Investors on the terms of the merger agreement, reviewing the course of negotiations on the material transaction terms and noting the key deal points that remained open, including the private equity sponsored leveraged buyout structure (and the size of the reverse termination fee if that structure were accepted) and the size of the termination fee. In response to questions from the Heinz Board, Mr. Johnson confirmed that there had been no discussions between the Investors and Heinz’s management team regarding the role, if any, of the management team following consummation of the merger. The Heinz Board then discussed the merits of the proposed transaction, including, among other factors, the ability to deliver a substantial premium to Heinz shareholders (with increased certainty given the concessions obtained from the Investors in the merger agreement) and the Investors’ continued commitment to Pittsburgh, Pennsylvania, which commitment was considered important to the Heinz Board. The Heinz Board and Heinz’s advisors discussed the advisability of seeking a lower termination fee, including the risk that seeking a lower termination fee would cause the Investors to insist on a lower reverse termination fee. At the conclusion of the meeting, the Heinz Board unanimously authorized Heinz and its advisors to continue the negotiation of definitive documentation on the terms discussed at the special meeting, including the acceptance of the private equity sponsored leveraged buyout structure and the size of the termination fee and reverse termination fee.

Later in the evening, representatives of Lazard, Centerview, Kirkland & Ellis and Davis Polk continued the negotiation of the reverse termination fee and termination fee, with Lazard first countering Heinz’s most recent proposal with a proposal that the reverse termination fee be equal to $1.3 billion (and would be payable six months following a failure of the merger to be consummated due to a failure of the debt financing sources to fund that financing) and the termination fee payable by Heinz would be equal to $750 million. Also during these discussions, the advisors reached agreement on the parties’ obligations to obtain the antitrust approvals necessary to complete the transaction. In particular, the parties agreed that all parties would agree to divestitures by Heinz or other reasonable limitations on its business or assets that, in the aggregate, generated sales revenue of less than $750 million during the twelve month period ending January 31, 2013. Later that evening, the parties agreed on $750 million for the termination fee payable by Heinz and $1.4 billion for the reverse termination fee payable by Parent (and guaranteed by the Investors). In exchange for the Investors’ agreeing to increase the reverse termination fee from $1.3 billion to $1.4 billion, Heinz agreed at the Investors’ request that, in the event there was a failure of the merger to be consummated due to a failure of the debt financing sources to fund that financing and the Investors within 10 business days of notice from Heinz commenced litigation against the debt financing sources, the merger agreement would remain in effect for up to the following four months (during which period the Investors could seek alternative financing to close the merger) and the reverse termination fee would, subject to certain conditions, be payable at the end of the four month period. At a subsequent discussion, the Investors agreed that the occurrence of a material adverse effect on Heinz after the date on which the merger would have been consummated but for the failure of the debt financing sources to fund that financing would not excuse the Investors from their obligation to pay the reverse termination fee if the merger were not consummated by the end of the four-month period referred to above.

On February 11, 2013, Messrs. Buffett, Behring and Johnson met in Omaha, Nebraska. During the meeting, Messrs. Johnson, Buffett and Behring discussed the transaction generally and Mr. Buffett again confirmed the Investors’ commitment to maintaining Heinz’s presence and heritage in Pittsburgh, Pennsylvania, which commitment was important to the Heinz Board. There were no discussions during the meeting regarding the role, if any, of the Heinz management team following consummation of the merger. Following the meeting, Mr. Johnson provided an update to Mr. Usher.

 

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Also on February 11, 2013, Davis Polk sent to Kirkland & Ellis and Munger Tolles revised drafts of the merger agreement, equity commitment letters and limited guarantees. Over the next two days, Davis Polk, Kirkland & Ellis and Munger Tolles continued negotiating the open points in the transaction documents, including the limits on and nature of actions that the Investors would agree to take or accept in order to get antitrust approvals and certain employment-related matters, including exceptions to the limitations on Heinz’s ability to make changes to employment arrangements after entering into the merger agreement and the Investors’ commitment for one year after closing that each continuing employee would be provided compensation and benefits the value of which, in the aggregate, is not less favorable than the value of compensation and benefits provided to such employee prior to closing (including maintaining the base wages or salary of each such employee for one-year post-closing).

On February 13, 2013, the Transaction Committee held a meeting in Pittsburgh, Pennsylvania, with all members of the committee in attendance. The Transaction Committee and representatives of Moelis again reviewed the merits of the proposal, as compared to the merits and considerations relating to Heinz’s future performance as a standalone entity, considering, among other things, the challenges facing Heinz and the industry more generally, as described and discussed at prior meetings. Moelis then delivered to the Transaction Committee its oral opinion, subsequently confirmed in writing, that, as of such date and subject to the various limitations and assumptions set forth in its opinion, the $72.50 per share consideration to be received in the merger by the holders of Heinz common stock was fair, from a financial point of view, to such holders. Wachtell reviewed the directors’ fiduciary duties. At the conclusion of the meeting, the Transaction Committee unanimously resolved to recommend the merger to the Heinz Board.

Immediately following the meeting of the Transaction Committee, the Heinz Board held a special meeting in Pittsburgh, Pennsylvania at which all directors were in attendance. During the meeting, Messrs. Johnson and Usher reported to the Heinz Board that negotiations with the Investors over the transaction documents had substantially concluded and that the language of the agreements was being finalized. Prior to the meeting, the directors had received copies of the draft merger agreement and a summary of the terms thereof and of the other transaction documents, and presentation materials prepared by Centerview and BofA Merrill Lynch and Moelis. Representatives of Davis Polk reviewed with the directors the process of the negotiations and with Reed Smith LLP, Pennsylvania counsel to Heinz, and the directors the fiduciary duties applicable to that process and a summary of the terms of the merger agreement, including the circumstances in which the Heinz Board could consider and respond to unsolicited acquisition proposals after the execution of the merger agreement and could terminate the merger agreement to enter into an alternative transaction, in each case consistent with their fiduciary duties. The Heinz Board again discussed with the advisors the merits and considerations of a “market check” process, both prior to and after entering into a merger agreement. Davis Polk also reviewed the financing structure of the transaction and the inclusion of a reverse termination fee and specific performance remedies to provide a level of assurances that the merger would be completed.

The Heinz Board then reviewed information received from each of Centerview, BofA Merrill Lynch and Moelis concerning the extent of their respective business relationships with, and the respective amounts of fees received from, the Investors and their affiliates in the previous two years, which matters are described in the sections entitled “—Opinions of Heinz’s Financial Advisors—Opinion of Centerview,” “—Opinions of Heinz’s Financial Advisors—Opinion of BofA Merrill Lynch” and “—Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board,” respectively. The Heinz Board, Heinz management, and Heinz’s financial advisors again reviewed the merits of the proposal, as compared to the merits and considerations relating to Heinz’s future performance as a standalone entity, considering, among other things, the challenges facing Heinz and the industry more generally, as described and discussed at prior meetings. Each of Centerview and BofA Merrill Lynch then delivered to the Heinz Board its oral opinion, subsequently confirmed in writing, that, as of such date and subject to the various limitations and assumptions set forth in its opinion, the $72.50 per share consideration to be received in the merger by the holders of Heinz common stock was fair, from a financial point of view, to such holders, and representatives of Moelis advised the Heinz Board that Moelis had delivered such an opinion to the Transaction Committee. Following these presentations and extensive discussions the

 

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Transaction Committee confirmed its unanimous recommendation of the merger and the merger agreement, and the Heinz Board unanimously approved the merger agreement, substantially in the form presented to the Heinz Board, the merger and the other transactions contemplated by the merger agreement (see the section titled “—Heinz’s Reasons for the Merger” below).

Following the Heinz Board’s approval of the merger agreement, the merger and the other transactions contemplated thereby, Heinz, Parent and Merger Sub finalized and executed the merger agreement and the other transaction documents later that night.

On February 14, 2013, Heinz and the Investors issued a joint press release announcing entry into the transaction prior to the opening of trading on the NYSE and Messrs. Johnson and Behring held a press conference in Pittsburgh, Pennsylvania to discuss the transaction and the Investors’ commitment to Pittsburgh.

On March 3, 2013, the Heinz Board held a special meeting by telephone, with all directors in attendance. During the meeting, the Heinz Board considered an amendment to the merger agreement to provide that, instead of vesting and being paid in full at the effective time of the merger, retention RSUs would remain subject to vesting pursuant to the existing terms of the applicable awards and the general timing of payment would be in accordance with such terms. On March 4, 2013, the parties to the merger agreement entered into the amendment.

Heinz’s Reasons for the Merger

In evaluating the merger agreement and the merger, the Heinz Board consulted with Heinz’s management and Heinz’s and the Transaction Committee’s respective legal and financial advisors and, in reaching its unanimous decision to approve the merger agreement and the merger and to recommend that Heinz shareholders approve the merger agreement, the Heinz Board considered a variety of factors, including the following:

 

   

the review of Heinz’s business, current and projected financial condition, current earnings and earnings prospects;

 

   

the Heinz Board’s belief that the $72.50 per share merger consideration exceeds Heinz’s likely value as a standalone company, including its potential for future growth, which belief was based on a number of factors, including:

 

   

the risks and uncertainties associated with maintaining Heinz’s performance as a standalone company, including, among other risks and uncertainties, generally unfavorable macroeconomic trends impacting Heinz’s business (which trends include, among others, lower international gross domestic product (particularly in Europe), relatively high unemployment, continuing volatility in the costs of commodities and other input costs and increased private label penetration), potential increases in Heinz’s tax rate, fluctuations in foreign exchange rates and the other risks and uncertainties described in Heinz’s SEC filings;

 

   

the inherent uncertainty of attaining management’s internal financial projections, including those set forth under “Certain Financial Projections” beginning on page [] of this proxy statement, including that Heinz’s actual financial results in future periods could be materially less than the projected results; and

 

   

the Heinz Board’s analysis of other strategic alternatives available to Heinz, including consideration of Heinz’s ability to successfully identify, obtain, execute and integrate acquisition targets, particularly in emerging markets;

 

   

the fact that the merger consideration consists solely of cash, providing Heinz shareholders with certainty of value and liquidity upon consummation of the merger;

 

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recent and historical market prices for Heinz common stock, as compared to the merger consideration, including the fact that the merger consideration of $72.50 per share represents an approximate premium of:

 

   

19.9% to the $60.48 closing price per share of Heinz common stock on February 13, 2013, the last trading day before public announcement of the merger agreement;

 

   

19.9% to the $60.46 average closing price per share of Heinz common stock for the 30-day period ended February 13, 2013;

 

   

22.6% to the $59.14 average closing price per share of Heinz common stock for the 90-day period ended February 13, 2013;

 

   

30.0% to the $55.78 average closing price per share of Heinz common stock for the one-year period ended February 13, 2013; and

 

   

18.9% to the February 7, 2013 all-time closing high trading price of $61.00 per share of Heinz common stock as of February 13, 2013;

 

   

the opinions of each of Centerview and BofA Merrill Lynch, financial advisors to Heinz, and Moelis, financial advisor to the Transaction Committee that, as of February 13, 2013, and subject to the various limitations and assumptions set forth in their respective opinions, the $72.50 per share in cash to be received by holders of Heinz common stock pursuant to the merger is fair to such shareholders from a financial point of view, and the financial analyses related thereto prepared by Centerview, BofA Merrill Lynch and Moelis and described below under “—Opinions of Heinz’s Financial Advisors—Opinion of Centerview,” “—Opinions of Heinz’s Financial Advisors—Opinion of BofA Merrill Lynch” and “—Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board,” respectively;

 

   

the fact that the Transaction Committee unanimously recommended that the Heinz Board approve the merger agreement and the merger and recommend that Heinz shareholders approve the merger agreement;

 

   

the fact that the Heinz Board negotiated an increase in the merger consideration to $72.50 from the Investors’ initial proposal of $70.00 on January 14, 2013, as described above under “—Background of the Merger”;

 

   

the fact that the Investors characterized their January 24, 2013 offer of $72.50 per share as their best and final offer and the Heinz Board’s belief that $72.50 per share was in fact the Investors’ best and final offer and that the Investors might withdraw their offer if Heinz were to solicit alternative acquisition proposals;

 

   

the Heinz Board’s belief, based on the advice of Heinz’s and the Transaction Committee’s respective financial advisors, that it was unlikely that any other financial sponsors or strategic buyers would be willing to acquire Heinz at a price in excess of $72.50 per share, even if Heinz were to conduct an auction process or other solicitation of alternative acquisition proposals (and risk causing the Investors to withdraw their offer);

 

   

the Heinz Board’s belief that the termination fee and other limitations applicable to alternative acquisition proposals agreed to in the merger agreement were reasonable and customary and would not preclude a serious and financially capable potential acquirer from submitting a proposal to acquire Heinz following the announcement of the merger;

 

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the fact that Heinz’s legal and financial advisors were involved throughout the process and negotiations and updated the Heinz Board directly and regularly, which provided the Heinz Board with additional perspectives on the negotiations in addition to those of Heinz’s management;

 

   

the fact that the Investors had committed equity funding in excess of 50% of the amount necessary to consummate the merger and the other transactions contemplated by the merger agreement and had received financing commitments from major commercial banks with significant experience in similar lending transactions and strong reputations for honoring the terms of their commitments in an amount that, in the Heinz Board’s assessment, together with the committed equity funding and the rollover of certain of Heinz’s existing debt, would be sufficient to consummate the merger and the other transactions contemplated by the merger agreement, including the payment of the merger consideration to Heinz shareholders;

 

   

the fact that the merger agreement permits Heinz to declare and pay to its shareholders dividends on a basis consistent with past practice during the period prior to the closing of the merger, which effectively increases the potential amount payable to Heinz shareholders through the effective time of the merger;

 

   

the Heinz Board’s review of the structure of the merger and the financial and other terms of the merger agreement, including, among others, the following specific terms of the merger agreement:

 

   

the limited and otherwise customary conditions to the parties’ obligations to complete the merger, including the commitment by Parent and Merger Sub to use their reasonable best efforts to obtain applicable regulatory approvals and their agreement to assume certain risks related to conditions and requirements imposed by regulators in connection with obtaining such approvals, up to an agreed threshold, and the representations, warranties and covenants of Parent and Merger Sub related to obtaining debt financing for the transaction, which were substantial assurances that the merger ultimately should be consummated on a timely basis;

 

   

the ability of the Heinz Board, subject to certain conditions, to provide information to and engage in discussions or negotiations with a third party that makes an unsolicited acquisition proposal if the Heinz Board determines in good faith, after consultation with its financial advisor and outside legal counsel, that such acquisition proposal constitutes or could reasonably be expected to lead to a superior proposal and that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties;

 

   

the ability of the Heinz Board, subject to certain conditions, to change its recommendation that Heinz shareholders approve the merger agreement and, in addition, to terminate the merger agreement in order to enter into an alternative acquisition agreement with respect to a superior proposal if the Heinz Board determines in good faith, after consultation with its financial advisor and outside legal counsel, that the failure to take such action would be reasonably likely to be inconsistent with its fiduciary duties;

 

   

the ability of Heinz to specifically enforce Parent’s and Merger Sub’s obligations under the merger agreement, including (subject to the satisfaction of the other closing conditions and the funding of the debt financing) their obligations to consummate the merger;

 

   

the customary nature of the representations, warranties and covenants of Heinz in the merger agreement;

 

   

the absence of a financing condition and the $1.4 billion reverse termination fee payable by Parent to Heinz if the merger were ultimately not consummated due to a failure of the debt financing sources to fund that financing, with each Investor guaranteeing 50% of such payment;

 

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the fact that the financial and other terms and conditions of the merger agreement minimize, to the extent reasonably practical, the risk that a condition to closing would not be satisfied and also provide reasonable flexibility to operate Heinz’s business during the pendency of the merger; and

 

   

the obligations of Parent under the merger agreement to maintain Heinz’s current headquarters in Pittsburgh, Pennsylvania, which will be the surviving corporation’s headquarters and the global home of the “Heinz” brand, to preserve Heinz’s name as “H. J. Heinz Company” and to preserve Heinz’s heritage and continue to support charitable and philanthropic causes in Pittsburgh, Pennsylvania and other constituencies and communities in which Heinz operates.

In the course of its deliberations, the Heinz Board, in consultation with Heinz’s management and Heinz’s and the Transaction Committee’s respective legal and financial advisors, also considered a variety of risks and other potentially negative factors relating to the merger, including the following:

 

   

the fact that, subsequent to completion of the merger, Heinz will no longer exist as an independent public company and that the nature of the transaction as a cash transaction would prevent Heinz shareholders from being able to participate in any value creation that Heinz could generate going forward, as well as any future appreciation in value of Heinz;

 

   

the fact that Heinz did not solicit proposals from other potential bidders, and that Heinz did not have contact with any potential buyers other than the Investors during the negotiations leading up to the execution of the merger agreement;

 

   

the covenant in the merger agreement prohibiting Heinz from soliciting other potential acquisition proposals, and restricting its ability to entertain other potential acquisition proposals unless certain conditions are satisfied;

 

   

the fact that Heinz would be obligated to pay a termination fee of $750 million under certain circumstances, including the potential impact of such termination fee on the willingness of other potential acquirers to propose alternative transactions, although the Heinz Board believed that the termination fee was reasonable and customary and would not preclude a serious and financially capable potential acquirer from submitting a proposal to acquire Heinz following the announcement of the merger;

 

   

the fact that Parent’s and Merger Sub’s obligation to consummate the merger are subject to conditions, and the possibility that such conditions may not be satisfied, including as a result of events outside of Heinz’s control, and the fact that, if the merger is not consummated:

 

   

Heinz’s directors, officers and other employees will have expended extensive time and effort and will have experienced significant distractions from their work during the pendency of the transaction, and Heinz will have incurred significant transaction costs attempting to consummate the transaction; and

 

   

the market’s perception of Heinz’s continuing business could potentially result in a loss of customers, vendors, business partners, collaboration partners and employees; and

 

   

the trading price of the Heinz common stock could be adversely affected;

 

   

the fact that, if Heinz terminates the merger agreement because the merger is not consummated as a result of the failure of the debt financing sources to fund that financing, then, in certain circumstances, payment to Heinz of the reverse termination fee may be delayed for up to four months while the Investors seek to cause the debt financing sources to fund that financing or to recover the reverse termination fee from the debt financing sources;

 

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the potential negative effect of the pendency of the merger on Heinz’s business and relationships with customers, vendors, business partners, collaboration partners and employees, including the risk that certain key members of Heinz management might choose not to remain employed with Heinz prior to the completion of the merger, regardless of whether or not the merger is completed;

 

   

the fact that Heinz is obligated to provide Parent with notice of any acquisition proposal and with three Business Days to match any competing acquisition proposal, although the Heinz Board believed this would not preclude a potential acquirer from submitting a proposal to acquire Heinz;

 

   

the fact that under the terms of the merger agreement, Heinz has agreed that it will carry on its business in the ordinary course consistent with past practice and, subject to specified exceptions, that Heinz will not take a number of actions related to the conduct of its business without Parent’s prior written consent, and the possibility these terms may limit the ability of Heinz to pursue business opportunities that it would otherwise pursue;

 

   

the fact that certain of Heinz’s directors and executive officers may receive certain benefits that are different from, and in addition to, those of Heinz’s other shareholders, as described in the section entitled “—Interests of Heinz’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement;

 

   

the fact that Heinz has incurred and will continue to incur significant transaction costs and expenses in connection with the proposed transaction, regardless of whether the merger is consummated; and

 

   

the fact that the merger consideration will be taxable to taxpaying shareholders of Heinz.

After considering the foregoing potentially negative and potentially positive factors, the Heinz Board concluded that the potentially positive factors relating to the merger agreement and the merger substantially outweighed the potentially negative factors.

The foregoing discussion of the information and factors considered by the Heinz Board is not exhaustive, but is intended to reflect the material factors considered by the Heinz Board in its consideration of the merger. In view of the complexity, and the large number, of the factors considered, the Heinz Board, both individually and collectively, did not quantify or assign any relative or specific weight to the various factors. Rather, the Heinz Board based its recommendation on the totality of the information presented to and considered by it. In addition, individual members of the Heinz Board may have given different weights to different factors.

The foregoing discussion of the information and factors considered by the Heinz Board is forward-looking in nature. This information should be read in light of the factors set forth in the section entitled “Caution Regarding Forward-Looking Statements” beginning on page [] of this proxy statement.

Recommendation of the Heinz Board of Directors

After careful consideration, the Heinz Board has unanimously approved the merger agreement, the merger, and the other transactions contemplated by the merger agreement.

The Heinz Board unanimously recommends that the Heinz shareholders vote “FOR” the proposal to approve and adopt the merger agreement.

 

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Opinions of Heinz’s Financial Advisors

Heinz retained Centerview and BofA Merrill Lynch as its advisors to advise the Heinz Board in connection with the merger.

Opinion of Centerview

On February 13, 2013, Centerview delivered to the Heinz Board its oral opinion, subsequently confirmed in a written opinion dated February 13, 2013, to the effect that, as of the date of the opinion, based upon and subject to the various assumptions and limitations set forth in the written opinion, the per share merger consideration to be paid to the holders of the outstanding shares of Heinz common stock (other than “excluded shares”, as defined in the merger agreement) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of the written opinion of Centerview, dated February 13, 2013, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Centerview in connection with its opinion, is attached as Annex B to this proxy statement and is incorporated by reference herein in its entirety. Centerview provided its opinion for the information and assistance of the Heinz Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction and its opinion only addresses the fairness, from a financial point of view, as of the date thereof, to the holders of the outstanding shares of Heinz common stock (other than excluded shares) of the per share merger consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion does not address any other term or aspect of the merger agreement or the transaction and does not constitute a recommendation to any shareholder of Heinz as to how any such holder or any other person should vote with respect to the merger or otherwise act with respect to the transaction or any other matter. Centerview has consented to the inclusion of a copy of its written opinion as Annex B to this proxy statement. The summary of the written opinion of Centerview set forth below is qualified in its entirety by reference to the full text of such written opinion.

We encourage you to carefully read the written opinion of Centerview described above in its entirety for a description of the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Centerview in connection with its opinion.

Summary of Centerview’s Opinion

In connection with its opinion, Centerview reviewed, among other things:

 

   

a draft of the Agreement dated February 13, 2013;

 

   

Annual Reports on Form 10-K of Heinz for the years ended April 29, 2012, April 27, 2011 and April 28, 2010;

 

   

certain interim reports to shareholders, including Quarterly Reports on Form 10-Q of Heinz;

 

   

certain publicly available research analyst reports for Heinz;

 

   

certain other communications from Heinz to its shareholders; and

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Heinz, including certain financial forecasts, analyses and projections relating to Heinz prepared by management of Heinz and furnished to Centerview by Heinz for purposes of Centerview’s analysis, which are referred to in this proxy statement as the Financial Forecasts and described under “—Certain Financial Projections” beginning on page [] of this proxy statement. (Centerview’s opinion refers to the items in the bullet points above collectively as the internal data).

 

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Centerview also conducted discussions with members of the senior management and representatives of Heinz regarding their assessment of the internal data and the strategic rationale for the transaction. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for Heinz and compared that data with similar data from certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant. Centerview also compared certain of the proposed financial terms of the transaction with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview did not assume any responsibility for independent verification of any of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with Heinz’s consent, relied upon such information as being complete and accurate. In that regard, Centerview assumed, at Heinz’s direction, that the internal data was reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Heinz as to the matters covered thereby and Centerview relied, at Heinz’s direction, on the internal data (including, without limitation, the Financial Forecasts) for purposes of its analysis and opinion. Centerview expressed no view or opinion as to the internal data or the assumptions on which it is based. In addition, at Heinz’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Heinz, nor was Centerview furnished with any such evaluation or appraisal, and Centerview was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Heinz. Centerview assumed, at Heinz’s direction, that the final executed merger agreement would not differ in any respect material to its analysis or its opinion from the draft of the merger agreement, dated February 13, 2013, reviewed by Centerview. Centerview also assumed, at Heinz’s direction, that the transaction will be consummated on the terms set forth in the merger agreement, without the waiver, modification or amendment of any term, condition or agreement the effect of which would be material to its analysis or its opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the transaction, no delay, limitation, restriction, condition or other change will be imposed, the effect of which would be material to Centerview’s analysis or its opinion. Centerview did not evaluate and expressed no opinion as to the solvency or fair value of Heinz, or the ability of Heinz to pay its obligations when they come due or as to the impact of the transaction on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and it did not express any opinion as to any legal, regulatory, tax or accounting matters.

Centerview expressed no view as to, and its opinion did not address, Heinz’s underlying business decision to proceed with or effect the transaction, or the relative merits of the transaction as compared to any alternative business strategies or transactions that might be available to Heinz or in which Heinz might engage. Centerview was not authorized to, and did not, solicit indications of interest from third parties regarding a potential transaction with Heinz. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of the opinion, to the holders of the outstanding shares of Heinz common stock (other than excluded shares) of the per share merger consideration to be paid to such holders pursuant to the merger agreement. Centerview was not asked to, and did not express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the transaction, including, without limitation, the structure or form of the transaction, or any other agreements or arrangements contemplated by the merger agreement or entered into in connection with or otherwise contemplated by the transaction, including, without limitation, the fairness of the transaction or any other term or aspect of the transaction to, or any consideration to be received in connection therewith by, or the impact of the transaction on, the holders of any other class of securities (including any holder of the “preferred shares” (as defined in the merger agreement)), creditors, or other constituencies of Heinz or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Heinz or any party, or class of such persons in connection with the transaction, whether relative to the per share merger consideration to be paid to the holders of the outstanding shares of Heinz common stock (other than excluded shares) pursuant to the merger agreement

 

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or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of the written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of the written opinion.

Centerview’s opinion does not constitute a recommendation to any shareholder of Heinz or any other person as to how such shareholder or other person should vote with respect to the merger or otherwise act with respect to the transaction or any other matter.

Centerview’s financial advisory services and written opinion were provided for the information and assistance of the members of the Heinz Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Financial Analysis

The following is a brief summary of the material financial and comparative analyses that Centerview deemed to be appropriate for this type of transaction and that were reviewed with the Heinz Board in connection with rendering Centerview’s opinion. The following summary, however, does not purport to be a complete description of all the financial analyses performed by Centerview in connection with rendering its opinion, nor does the order of analyses described represent relative importance or weight given to those analyses by Centerview.

Some of the summaries of the financial analyses include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses of Centerview. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before February 12, 2013 (the last trading day prior to the date that Centerview delivered its opinion to the Heinz Board) and is not necessarily indicative of current market conditions.

Historical Stock Trading Analysis

Centerview reviewed the historical trading prices and volumes for Heinz common stock. This analysis indicated that the $72.50 per share merger consideration to be paid pursuant to the merger agreement represented an approximately 19.1% premium to the closing price of the shares of Heinz common stock on February 12, 2013, of $60.88. Centerview noted that the low and high closing prices for Heinz common stock during the 52-week period ended February 12, 2013 were $51.69 and $61.00 per share, respectively.

 

Premium Implied by Per Share Merger Consideration vs.:

Prior Closing Price

   19.1%

52-Week High (2/7/13)

   18.9%

52-Week Low (2/14/12)

   40.3%

30-Day Average

   20.1%

52-Week Average

   30.0%

All-Time High (2/7/13)

   18.9%

 

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Analyst Price Targets

Centerview reviewed stock price targets for Heinz common stock reflected in publicly available Wall Street research analyst reports, Thomson Analytics and FactSet (a data source containing historical and estimated financial data) as of February 13, 2013 (prior to the market open). Centerview noted that the low, average and high analyst stock price targets in such research analyst reports were approximately $53.00, $59.27 and $65.00 per share of Heinz common stock, respectively.

Selected Trading Comparables Analysis

Centerview reviewed and compared certain financial information, ratios and multiples (including enterprise value / EBITDA multiple and P/E ratio, as described below) for Heinz to corresponding financial information, ratios and multiples for the following publicly traded companies in the food industry (including both U.S.-focused companies and global/mega cap companies) that Centerview, based on its experience in the industry and judgment as a financial advisor, deemed comparable to Heinz (the “selected companies”):

 

U.S.-focused companies

 

•    Campbell Soup Company

 

•    ConAgra Foods, Inc.

 

•    General Mills, Inc.

 

•    The Hershey Company

 

•    The Kellogg Company

 

•    Kraft Foods Group, Inc.

  

Global/mega cap companies

 

•    Groupe Danone S.A

 

•    Mondelēz International, Inc.

 

•    Nestlé S.A.

 

•    PepsiCo, Inc.

 

•    Unilever PLC

Although none of the selected companies is directly comparable to Heinz, the selected companies were chosen because they are publicly traded companies with certain operational and financial characteristics (including, but not limited to, the size, business lines and geographic footprint of the respective companies), which, for purposes of analysis, may be considered similar to certain operational or financial characteristics of Heinz. Centerview also made qualitative judgments, based on its experience in the industry and judgment as a financial advisor, concerning differences between the business, financial and operating characteristics and prospects of Heinz and the selected companies that could affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis.

Centerview calculated and compared the financial multiples and ratios for the selected companies based on information it obtained from SEC filings, FactSet, Wall Street research, IBES (Institutional Brokers’ Estimate System) and closing stock prices on February 12, 2013. The multiples and ratios of Heinz were calculated using the closing price of Heinz common stock on February 12, 2013, publicly available data and the internal data for Heinz. With respect to each of the selected companies, Centerview calculated enterprise value, which is generally the market value of common equity (taking into account applicable dilutive securities) plus the book value of debt less cash adjusted for any minority interest positions, equity interest positions and certain announced transactions as appropriate, as a multiple of estimated calendar year 2013 earnings before interest, taxes, depreciation and amortization, or EBITDA, and as a multiple of last-twelve-months, or LTM, EBITDA, respectively, in each case excluding one-time expenses and non-recurring charges as well as adjusting for certain announced transactions as appropriate. Also with respect to each of the selected companies, Centerview calculated and analyzed each company’s ratio of its current stock price to its projected calendar year 2013 earnings per share, or EPS (a ratio commonly referred to as a price to earnings ratio, or P/E) and LTM EPS, respectively, in each case excluding one-time expenses and non-recurring charges as well as adjusting for certain announced transactions as appropriate. The results of the analysis were as follows:

 

     Enterprise Value/EBITDA   P/E
     LTM    CY 2013E   LTM    CY 2013E

Mean

  11.2x    10.6x   17.6x    16.6x

Median

  10.8x    10.2x   17.3x    16.2x

Heinz

  11.9x    11.2x   17.3x    16.4x

 

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Centerview then drew from this analysis of the enterprise value / LTM EBITDA above and other considerations that Centerview deemed relevant in its judgment and experience illustrative ranges of multiples of 10x-12x for Heinz’s enterprise value / LTM EBITDA. Centerview then applied the illustrative ranges of multiples to Heinz’s LTM EBITDA for the period ended October 28, 2012. The results of this analysis implied a value per share range for shares of Heinz common stock of approximately $49.50 to $61.75, based on the outstanding number of shares of Heinz common stock on a diluted basis. This range of $49.50 to $61.75 per share was compared to the $72.50 per share merger consideration to be paid pursuant to the merger agreement.

Selected Precedent Transactions Analysis

Centerview analyzed certain information relating to selected transactions since 2000 in the food industry with transaction values over $3.5 billion that Centerview, based on its experience and judgment as a financial advisor, deemed relevant to consider in relation to Heinz and the merger. These transactions were:

 

Date of Transaction
Announcement
   Target    Acquiror    Transaction
Value
($billion)
     Enterprise
Value /
LTM
Sales
     Enterprise
Value /
LTM
EBITDA
 

November 2012

   Ralcorp Holdings Inc.   

ConAgra Foods, Inc.

 

   $ 6.8         1.5x         11.9x   

November 2010

   Del Monte Foods Co.   

Funds affiliated with Kohlberg Kravis Roberts & Co. L.P.,

Vestar Capital Partners and Centerview Partners

   $ 5.3         1.4x         8.8x   

January 2010

   Kraft Foods’ North America frozen pizza business    Nestlé S.A.    $ 3.7         1.8x         12.5x   

July 2007

   Group Danone S.A.’s biscuits division    Kraft Foods Group, Inc.    $ 7.2         2.6x         13.2x   

December 2000

   Quaker Oats Co.    PepsiCo, Inc.    $ 14.0         2.8x         15.6x   

October 2000

   The Keebler Company    The Kellogg Company    $ 4.4         1.6x         11.1x   

July 2000

   Pillsbury    General Mills, Inc.    $ 10.5         1.7x         11.0x   

June 2000

   Nabisco Holdings Corp.    Philip Morris Companies Inc.    $ 18.9         2.1x         13.2x   

June 2000

   Bestfoods    Unilever PLC    $ 24.3         2.6x         13.9x   

No company or transaction used in this analysis is identical or directly comparable to Heinz or the merger. The companies included in the selected transactions are companies with certain characteristics that, for the purposes of this analysis, may be considered similar to certain of Heinz’s results, business mix or product profile. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Heinz was compared.

 

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For each of the selected transactions, based on information it obtained from SEC filings, FactSet, Wall Street research and Capital IQ, Centerview calculated and compared transaction value as a multiple of LTM sales and LTM EBITDA, with LTM EBITDA excluding one-time expenses and non-recurring charges. This analysis indicated the following multiples:

 

     

Implied Enterprise Value

as a Multiple of:

 
      LTM Sales      LTM EBITDA  

Mean

     2.0x         12.4x   

Median

     1.8x         12.5x   

Centerview then drew from this analysis and other considerations that Centerview deemed relevant in its judgment and experience an illustrative range of multiples of implied enterprise value / LTM EBITDA of 11x-14x. Centerview then applied the illustrative ranges of multiples to Heinz’s LTM EBITDA for the period ended October 28, 2012. The results of this analysis implied a value per share range for shares of Heinz common stock of approximately $55.75 to $74.00, based on the outstanding number of shares of Heinz common stock on a diluted basis. This range of $55.75 to $74.00 per share was compared to the $72.50 per share merger consideration to be paid pursuant to the merger agreement.

Premiums Paid Analysis

Centerview analyzed certain information relating to selected all-cash transactions since 2001 that involved publicly traded companies with transaction values greater than $10 billion. Centerview analyzed premiums to the last unaffected share price pre-announcement and 52-week high daily closing prices, respectively. The following table presents the results of this analysis with respect to the selected transactions:

 

     

Premiums Based on One-Day

Prior Share Prices

   

Premiums Based on 52-Week

High Daily Closing Prices

 

25th Percentile

     25     10

Median

     31     22

75th Percentile

     44     27

Based on the foregoing, Centerview determined illustrative ranges of premiums of approximately 25% to 44% (based on the unaffected share prices) to the closing price per share of Heinz common stock as of February 12, 2013 and of approximately 10% to 27% (based on the 52-week high daily closing prices) to the 52-week high daily closing price per share of Heinz common stock, respectively.

This analysis resulted in illustrative ranges of implied values per share of Heinz common stock of approximately $76.00 to $88.25 (based on the unaffected share price) and approximately $67.00 to $77.50 (based on the 52-week high daily closing price), respectively, compared to the $72.50 per share merger consideration to be paid pursuant to the merger agreement.

Discounted Cash Flow Analysis

Based on the Financial Forecasts (calculated using the Heinz management plan tax rates (as defined below under “—Certain Financial Projections” beginning on page [] of this proxy statement)), Heinz’s public filings, Bloomberg, Ibbotson and FactSet as of February 12, 2013, Centerview performed a discounted cash flow analysis of Heinz, which included calculating the estimated present value of the standalone, unlevered, after-tax free cash flows (representing EBIT, less taxes, plus depreciation and amortization, less capital expenditures, less the amount of any increase or plus the amount of any decrease in net working capital, less the amount of any increase in other current assets, plus the amount of any decrease in other current liabilities) that Heinz could generate from the year ended April 2014 through the year ended April 2018 and terminal values based on an

 

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EBITDA multiple range of 10.0x to 12.0x (derived from the EBITDA trading multiples for the selected companies determined by Centerview based on its experience in the industry and judgment as a financial advisor) applied to Heinz’s estimated 2018 EBITDA. The standalone, unlevered, after-tax free cash flows and terminal values were discounted to present value using discount rates ranging from 5.5% to 7.0%, which were based on a weighted average cost of capital analysis of the selected companies described above under “—Selected Trading Comparables Analysis,” which were determined by Centerview based on its experience in the industry and judgment as a financial advisor, taking into account certain metrics including levered and unlevered beta, tax rates and current yields for U.S. treasury notes. Centerview performed this analysis using both the Projections Excluding M&A (as defined below under “—Certain Financial Projections” beginning on page [] of this proxy statement) with the Heinz management plan tax rates and the Projections Excluding M&A with the full tax rates and an adjustment for the repatriation of available cash from foreign jurisdictions.

This analysis resulted in implied values per share of Heinz common stock of approximately $68.25 to $86.25 (using the Projections Excluding M&A with the Heinz management plan tax rates) and approximately $64.00 to $81.75 (using the Projections Excluding M&A with the full tax rates assuming repatriation to the U.S. of all of Heinz’s overseas cash), respectively, compared to the $72.50 per share merger consideration to be paid pursuant to the merger agreement.

Other Considerations

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Centerview believes that selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Centerview’s opinion. In arriving at its fairness determination, Centerview considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. In its analyses, Centerview considered industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Heinz. No company or transaction used in the analyses is identical to Heinz or the merger, and an evaluation of the results of the analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the public trading, acquisition or other values of the companies analyzed. The estimates contained in the analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, the estimates used in, and the results derived from, the analyses are inherently subject to substantial uncertainty. Centerview prepared the above analyses for the purpose of providing its opinion to the Heinz Board regarding whether, as of the date of the written opinion, the per share merger consideration to be paid to the holders of the outstanding shares of Heinz common stock (other than excluded shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Heinz, Centerview or any other person assumes responsibility if future results are materially different from those forecasted.

The opinion and analyses of Centerview were only one of many factors taken into consideration by the Heinz Board in its evaluation of the transaction. Consequently, the analyses described above should not be viewed as determinative of the views of the Heinz Board or Heinz’s management with respect to the per share merger consideration or as to whether the Heinz Board would have been willing to determine that a different consideration was fair. The consideration for the merger was determined through arm’s-length negotiations between Heinz and Parent and was approved by the Heinz Board. Centerview provided advice to Heinz during

 

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these negotiations. Centerview did not, however, recommend any specific amount of consideration to Heinz or the Heinz Board or that any specific amount of consideration constituted the only appropriate consideration for the merger.

Centerview is a securities firm engaged directly and through affiliates in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, Centerview provided certain investment banking services to Heinz and its affiliates from time to time, pursuant to which Centerview did not receive compensation. Centerview did not in the past provide, and is not currently providing, investment banking or other services to Parent or Merger Sub. In the two years prior to the date of its written opinion, Centerview did not provide investment banking or other services to 3G Capital or Berkshire Hathaway (which are affiliates of Parent and Merger Sub) or their respective affiliates or portfolio companies. Centerview may provide investment banking and other services to or with respect to Heinz or Parent or their respective affiliates and portfolio companies of such affiliates in the future, for which Centerview may receive compensation. Principals of 3G Capital are, indirectly through certain investment vehicles, limited partners in Centerview Capital, L.P., which is an investment fund whose manager is controlled by certain principals of Centerview Partners LLC. Certain (1) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of these persons, (2) of Centerview’s affiliates or investment funds managed by Centerview’s affiliates and (3) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may acquire, hold, sell or trade, in debt, equity and other securities of, or investments in, Heinz, Parent, 3G Capital, Berkshire Hathaway or any of their respective affiliates and portfolio companies, or any other party that may be involved in the transaction and its respective affiliates.

The Heinz Board selected Centerview as its financial advisor because it is a nationally recognized investment banking firm that has substantial experience in transactions similar to the merger. Centerview has acted as financial advisor to Heinz in connection with, and has participated in certain of the negotiations leading to, the merger. In consideration of Centerview’s services, pursuant to a letter agreement, dated February 13, 2013, Heinz has agreed to pay Centerview a fee of approximately $36 million, $4 million of which was paid following the execution of the merger agreement, and the remainder of which will become payable upon the consummation of the merger. Heinz has also agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of its engagement.

Opinion of BofA Merrill Lynch

Heinz has retained BofA Merrill Lynch to act as Heinz’s financial advisor in connection with the merger. BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in the valuation of businesses and securities in connection with mergers and acquisitions, negotiated underwritings, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Heinz selected BofA Merrill Lynch to act as Heinz’s financial advisor in connection with the merger on the basis of BofA Merrill Lynch’s experience in transactions similar to the merger, its reputation in the investment community and its familiarity with Heinz and its business.

On February 13, 2013, at a meeting of the Heinz Board held to evaluate the merger, BofA Merrill Lynch delivered to the Heinz Board an oral opinion, which was confirmed by delivery of a written opinion dated February 13, 2013, to the effect that, as of the date of the opinion and based on and subject to various assumptions and limitations described in its opinion, the merger consideration to be received by holders of Heinz common stock was fair, from a financial point of view, to such holders.

The full text of BofA Merrill Lynch’s written opinion to the Heinz Board, which describes, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken, is attached as Annex C to this proxy statement and is incorporated by reference herein in its entirety. The following summary of BofA Merrill Lynch’s opinion is qualified in its entirety by reference to the full text of the opinion. BofA Merrill Lynch delivered its opinion to the Heinz Board for the benefit

 

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and use of the Heinz Board (in its capacity as such) in connection with and for purposes of its evaluation of the merger consideration from a financial point of view. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Heinz or in which Heinz might engage or as to the underlying business decision of Heinz to proceed with or effect the merger. BofA Merrill Lynch’s opinion does not address any other aspect of the merger and does not constitute a recommendation to any shareholder as to how to vote or act in connection with the proposed merger or any related matter.

In connection with rendering its opinion, BofA Merrill Lynch:

 

   

reviewed certain publicly available business and financial information relating to Heinz;

 

   

reviewed the Financial Forecasts;

 

   

discussed the past and current business, operations, financial condition and prospects of Heinz with members of senior management of Heinz;

 

   

reviewed the trading history for Heinz common stock and a comparison of that trading history with the trading histories of other companies BofA Merrill Lynch deemed relevant;

 

   

compared certain financial and stock market information of Heinz with similar information of other companies BofA Merrill Lynch deemed relevant;

 

   

compared certain financial terms of the merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch deemed relevant;

 

   

reviewed the merger agreement; and

 

   

performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.

In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the management of Heinz that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Financial Forecasts, BofA Merrill Lynch was advised by Heinz, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of Heinz as to the future financial performance of Heinz. BofA Merrill Lynch did not make or was not provided with any independent evaluation or appraisal of the assets or liabilities (contingent or otherwise) of Heinz, nor did it make any physical inspection of the properties or assets of Heinz. BofA Merrill Lynch did not evaluate the solvency or fair value of Heinz or Parent under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at the direction of Heinz, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Heinz or the contemplated benefits of the merger.

BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects of the merger (other than the merger consideration to the extent expressly specified in its opinion), including, without limitation, the form or structure of the merger. BofA Merrill Lynch was not requested to, and did not, solicit indications of

 

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interest or proposals from third parties regarding a possible acquisition of all or any part of Heinz or an alternative transaction. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, of the merger consideration to be received by the holders of Heinz common stock and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any other class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to Heinz or in which Heinz might engage or as to the underlying business decision of Heinz to proceed with or effect the merger. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the merger or any related matter. Except as described above, Heinz imposed no other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.

BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee.

The following represents a brief summary of the material financial analyses presented by BofA Merrill Lynch to the Heinz Board in connection with its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses performed by BofA Merrill Lynch, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses performed by BofA Merrill Lynch. Considering the data set forth in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of the financial analyses performed by BofA Merrill Lynch.

Heinz Financial Analyses

Selected Publicly Traded Companies Analysis. BofA Merrill Lynch reviewed publicly available financial and stock market information for Heinz and the following eleven publicly traded companies in the food industry, which BofA Merrill Lynch, based on its experience and professional judgment, deemed comparable to Heinz (which companies were the same as those reviewed and compared by Centerview in its respective analysis):

 

   

Kraft Foods Group, Inc.

 

   

General Mills, Inc.

 

   

Kellogg Company

 

   

ConAgra Foods, Inc.

 

   

The Hershey Company

 

   

Groupe Danone S.A.

 

   

Campbell Soup Company

 

   

Nestlé S.A.

 

   

PepsiCo, Inc.

 

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Unilever PLC

 

   

Mondelēz International Inc.

BofA Merrill Lynch reviewed, among other things, per share equity values, based on closing stock prices on February 12, 2013, of the selected publicly traded companies as a multiple of latest 12 months earnings per share, commonly referred to as a price to earnings ratio, or P/E, and as a multiple of estimated calendar year 2013 earnings. BofA Merrill Lynch also reviewed enterprise values of the selected publicly traded companies, calculated as equity values based on fully diluted shares outstanding using the treasury method multiplied by the closing stock prices on February 12, 2013, plus debt and minority interest, less cash and marketable securities, and adjusted for certain announced transactions as appropriate, as a multiple of latest 12 months earnings before interest, taxes, depreciations and amortization, commonly referred to as EBITDA, and as a multiple of estimated calendar year 2013 EBITDA. The results of the analysis were as follows:

 

     Enterprise Value/EBITDA   P/E
     LTM    CY 2013E   LTM    CY 2013E

Mean

  11.2x    10.6x   17.6x    16.6x

Median

  10.8x    10.2x   17.3x    16.2x

Heinz

  11.9x    11.2x   17.3x    16.4x

Based on its professional judgment and after taking into consideration, among other things, the observed data for the selected companies, BofA Merrill Lynch then applied a selected range of latest 12 months EBITDA multiples of 10.0x to 12.0x derived from the selected publicly traded companies to Heinz’s latest 12 months (as of October 28, 2012) EBITDA. Financial data of the selected publicly traded companies were based on publicly available information, and financial data of Heinz were based on Heinz’s public filings. This analysis indicated the following approximate implied per share equity value reference ranges for Heinz, as compared to the merger consideration:

 

Implied Per Share Equity Value Reference Ranges for Heinz

  

Merger Consideration

$49.50 - $61.75    $72.50

No company used in this analysis is identical or directly comparable to Heinz. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Heinz was compared.

 

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Selected Precedent Transactions Analysis. BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to the following nine selected transactions valued over $3.5 billion involving companies in food industry, which, based on its professional experience and judgment, BofA Merrill Lynch deemed relevant to consider in relation to Heinz and the merger:

 

Announcement Date

 

Acquiror

 

Target

 

Transaction
Value ($bn)

 

Multiple of LTM

       

Sales

 

EBITDA

November 2012

 

•   ConAgra Foods, Inc.

 

•   Ralcorp Holdings, Inc.

 

•   $6.8

 

•   1.5x

 

•   11.9x

November 2010

 

•   KKR & Co.

 

•   Del Monte Foods Co.

 

•   $5.3

 

•   1.4x

 

•   8.8x

January 2010

 

•   Nestle S.A.

 

•   Kraft Foods’ Frozen Pizza Division

 

•   $3.7

 

•   1.8x

 

•   12.5x

July 2007

 

•   Kraft Foods Group, Inc.

 

•   Danone S.A.’s Biscuits Division

 

•   $7.2

 

•   2.6x

 

•   13.2x

December 2000

 

•   PepsiCo, Inc.

 

•   The Quaker Oats Company

 

•   $14.0

 

•   2.8x

 

•   15.6x

October 2000

 

•   Kellogg Company

 

•   Keebler Foods Company

 

•   $4.4

 

•   1.6x

 

•   11.1x

July 2000

 

•   General Mills, Inc.

 

•   Diageo PLC’s Pillsbury Division

 

•   $10.5

 

•   1.7x

 

•   11.0x

June 2000

 

•   Philip Morris Companies Inc.

 

•   Nabisco Holdings Corp.

 

•   $18.9

 

•   2.1x

 

•   13.2x

June 2000

 

•   Unilever plc

 

•   Bestfoods

 

•   $24.3

 

•   2.6x

 

•   13.9x

BofA Merrill Lynch reviewed transaction values, calculated as the enterprise value implied for the target company based on the consideration payable in the selected transaction, as a multiple of the target company’s latest 12 months EBITDA. The overall high to low latest 12 months EBITDA multiples observed for the selected transactions were 8.8x to 15.6x. Based on its professional judgment and after taking into consideration, among other things, the observed data for the selected transactions, BofA Merrill Lynch then applied a selected range of latest 12 months EBITDA multiples of 11.0x to 14.0x derived from the selected transactions to Heinz’s latest 12 months (as of October 28, 2012) EBITDA. Estimated financial data of the selected transactions were based on publicly available information at the time of announcement of the relevant transaction. Financial data of Heinz were based on Heinz’s public filings. This analysis indicated the following approximate implied per share equity value reference ranges for Heinz, as compared to the merger consideration:

 

Implied Per Share Equity Value Reference Ranges for Heinz

  

Merger Consideration

$55.75 - $74.00    $72.50

No company, business or transaction used in this analysis is identical or directly comparable to Heinz or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Heinz and the merger were compared.

Discounted Cash Flow Analysis. BofA Merrill Lynch performed a discounted cash flow analysis of Heinz to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Heinz was forecasted to generate during Heinz’s fiscal years 2014 through 2018 based on the Projections Excluding M&A and assuming the Heinz management plan tax rates, as described under “—Certain Financial Projections” beginning on page [] of this proxy statement. For purposes of its discounted cash flow analyses, BofA Merrill

 

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Lynch defined “standalone unlevered, after-tax free cash flow” as EBITDA less taxes, changes in net working capital and capital expenditures. BofA Merrill Lynch calculated terminal values for Heinz by applying to Heinz’s fiscal year 2018 projected EBITDA a range of terminal multiples of 10.0x to 12.0x, which range was selected based on BofA Merrill Lynch’s professional judgment and after taking into consideration, among other things, the growth of the overall economy, Heinz’s performance and trading multiples range for selected publicly traded companies. The cash flows and terminal values were then discounted to present value as of April 30, 2013 using discount rates ranging from 5.5% to 7.0%, which range was based on an estimate of Heinz’s weighted average cost of capital, taking into account certain metrics including levered and unlevered beta, tax rates and current yields for U.S. treasury notes. This analysis indicated the following approximate implied per share equity value reference ranges for Heinz as compared to the merger consideration:

 

Implied Per Share Equity Value
Reference Range for Heinz

  

Merger Consideration

$68.25 - $86.25    $72.50

BofA Merrill Lynch also performed a discounted cash flow analysis of Heinz to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Heinz was forecasted to generate during Heinz’s fiscal years 2014 through 2018 based on the Projections Excluding M&A and assuming the full tax rates, as described under “—Certain Financial Projections” beginning on page [] of this proxy statement, on future cash flows and adjusting for the impact of the repatriation of available cash from foreign jurisdictions. BofA Merrill Lynch calculated terminal values for Heinz by applying to Heinz’s fiscal year 2018 projected EBITDA a range of terminal multiples of 10.0x to 12.0x, which range was selected based on BofA Merrill Lynch’s professional judgment and after taking into consideration, among other things, the growth of the overall economy, Heinz’s performance and trading multiples ranges for selected publicly traded companies. The cash flows and terminal values were then discounted to present value as of April 30, 2013 using discount rates ranging from 5.5% to 7.0%, which range was based on an estimate of Heinz’s weighted average cost of capital, taking into account certain metrics including levered and unlevered beta, tax rates and current yields for U.S. treasury notes. This analysis indicated the following approximate implied per share equity value reference ranges for Heinz as compared to the merger consideration:

 

Implied Per Share Equity Value
Reference Range for Heinz

  

Merger Consideration

$64.00 - $81.75    $72.50

Other Factors

BofA Merrill Lynch also noted certain financial factors that were not considered part of BofA Merrill Lynch’s financial analyses with respect to its opinion but were referenced for informational purposes, including, among other things, the following:

 

   

closing prices of Heinz’s common stock (i) during the 52-week period ended February 12, 2013, the last trading day prior to the meeting of the Heinz Board held to evaluate the merger at which BofA Merrill Lynch delivered to the Heinz Board its oral opinion, noting that during such period Heinz’s closing stock prices ranged from $51.69 to $61.00 per share (with the latter representing the all-time high); and (ii) during each of the 52-week period and the 30-day period ended February 12, 2013, noting that during such periods Heinz’s average closing stock prices were $55.75 and $60.38 per share, respectively; and

 

   

the most recent price targets for Heinz’s common stock, as provided by equity analysts at fifteen firms, noting that such price targets ranged from $53.00 to $65.00 per share.

 

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Miscellaneous

As noted above, the discussion set forth above is a summary of the material financial analyses presented by BofA Merrill Lynch to the Heinz Board in connection with its opinion and is not a comprehensive description of all analyses undertaken by BofA Merrill Lynch in connection with its opinion. The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to partial analysis or summary description. BofA Merrill Lynch believes that its analyses summarized above must be considered as a whole. BofA Merrill Lynch further believes that selecting portions of its analyses and the factors considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying BofA Merrill Lynch’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.

In performing its analyses, BofA Merrill Lynch considered industry performance, general business and economic conditions and other matters, many of which are beyond the control of Heinz and Parent. The estimates of the future performance of Heinz and Parent in or underlying BofA Merrill Lynch’s analyses are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than those estimates or those suggested by BofA Merrill Lynch’s analyses. These analyses were prepared solely as part of BofA Merrill Lynch’s analysis of the fairness, from a financial point of view, of the merger consideration and were provided to the Heinz Board in connection with the delivery of BofA Merrill Lynch’s opinion. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities have traded or may trade at any time in the future. Accordingly, the estimates used in, and the ranges of valuations resulting from, any particular analysis described above are inherently subject to substantial uncertainty and should not be taken to be BofA Merrill Lynch’s view of the actual values of Heinz or Parent.

The type and amount of consideration payable in the merger was determined through negotiations between Heinz and Parent, rather than by any financial advisor, and was approved by the Heinz Board. The decision to enter into the merger agreement was solely that of the Heinz Board. As described above, BofA Merrill Lynch’s opinion and analyses were only one of many factors considered by the Heinz Board in its evaluation of the proposed merger and should not be viewed as determinative of the views of the Heinz Board or management with respect to the merger or the merger consideration.

Heinz has agreed to pay BofA Merrill Lynch for its services in connection with the merger an aggregate fee of approximately $21,000,000, $2,000,000 of which is payable in connection with its opinion and $19,000,000 of which is contingent upon the completion of the merger. Heinz also has agreed to reimburse BofA Merrill Lynch for its expenses incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.

BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities, and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of their businesses, BofA Merrill Lynch and its affiliates invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in the equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of Heinz and certain of Heinz’s and Parent’s respective affiliates (including, without limitation, Berkshire Hathaway, 3G Capital and certain of their respective affiliates and portfolio companies).

 

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BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Heinz and its affiliates and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as a manager or underwriter for certain debt offerings of Heinz and (ii) having acted or acting as syndication agent, book runner and arranger for, and lender under, certain credit facilities, letters of credit and leasing facilities of Heinz and its affiliates. From January 1, 2011 through January 31, 2013, BofA Merrill Lynch and its affiliates received aggregate revenues from Heinz and its affiliates for investment, commercial and corporate banking services of approximately $5 million.

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Berkshire Hathaway, an affiliate of Parent, and certain of Berkshire Hathaway’s affiliates and portfolio companies and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as a manager or underwriter for various debt offerings of Berkshire Hathaway and certain of its affiliates and portfolio companies, (ii) having acted or acting as administrative agent, book runner and arranger for, and lender under, certain credit facilities, letters of credit and leasing facilities of certain of Berkshire Hathaway’s affiliates and portfolio companies, (iii) having provided or providing certain foreign exchange, fixed income and other trading services to Berkshire Hathaway and certain of its affiliates and portfolio companies and (iv) having provided or providing certain treasury and management services and products to Berkshire Hathaway and certain of its affiliates and portfolio companies. Also, on September 1, 2011, Bank of America Corporation, BofA Merrill Lynch’s parent company (“BAC”), sold 50,000 shares of BAC’s Series T Cumulative Perpetual Preferred Stock (each share of which has a liquidation value of $100,000 per share and on which dividends accrue at a rate of 6% per annum) and a warrant to purchase 700 million shares of BAC’s common stock to Berkshire Hathaway for an aggregate purchase price of $5.0 billion. From January 1, 2011 through January 31, 2013, BofA Merrill Lynch and its affiliates received aggregate revenues from Berkshire Hathaway and entities that BofA Merrill Lynch understands may be Berkshire Hathaway’s affiliates and portfolio companies for investment, commercial and corporate banking services of approximately $55 million.

In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to 3G Capital, an affiliate of Hawk Acquisition, and certain of 3G Capital’s affiliates and portfolio companies and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as a manager or underwriter for various debt offerings of certain of 3G Capital’s affiliates and portfolio companies, (ii) having acted or acting as syndication agent, book runner and arranger for, and lender under, certain credit facilities, letters of credit and leasing facilities of certain of 3G Capital’s affiliates and portfolio companies, (iii) having provided or providing certain commodity, derivatives, foreign exchange and other trading services to certain of 3G Capital’s affiliates and portfolio companies and (iv) having provided or providing certain treasury and management services and products to certain of 3G Capital’s affiliates and portfolio companies. From January 1, 2011 through January 31, 2013, BofA Merrill Lynch and its affiliates received aggregate revenues from 3G Capital and entities that BofA Merrill Lynch understands may be 3G Capital’s affiliates and portfolio companies for investment, commercial and corporate banking services of approximately $35 million.

Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board

The Transaction Committee retained Moelis as its advisor to advise the Transaction Committee in connection with the merger.

At the meeting of the Transaction Committee on February 13, 2013 to evaluate and to decide whether to recommend the merger to the Heinz Board, Moelis delivered an oral opinion, which was confirmed by delivery of a written opinion, dated February 13, 2013, addressed to the Transaction Committee to the effect that, as of the date of the opinion and based upon and subject to the conditions and limitations set forth in the opinion, the

 

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merger consideration to be received in the merger by holders of Heinz common stock was fair, from a financial point of view, to such holders.

The full text of Moelis’ written opinion, dated February 13, 2013, which sets forth the assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex D to this proxy statement. Shareholders are urged to read Moelis’ written opinion carefully and in its entirety. Moelis’ opinion was provided for the use and benefit of the Transaction Committee and the Heinz Board (in their respective capacities as such) in their evaluation of the merger. Moelis’ opinion is limited solely to the fairness, from a financial point of view, of the merger consideration to the holders of Heinz common stock, and does not address Heinz’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available with respect to Heinz. Moelis’ opinion does not constitute a recommendation to any shareholder of Heinz as to how such shareholder should vote or act with respect to the merger or any other matter. Moelis’ opinion was approved by the Moelis fairness opinion committee.

In arriving at its opinion, Moelis, among other things:

 

   

reviewed certain publicly available business and financial information relating to Heinz;

 

   

reviewed certain internal information relating to the business, earnings, cash flow, assets, liabilities and prospects of Heinz furnished to Moelis by Heinz, including the Projections Excluding M&A;

 

   

conducted discussions with members of senior management and representatives of Heinz concerning the publicly available and internal information described in the foregoing, as well as the business and prospects of Heinz generally;

 

   

reviewed publicly available financial and stock market data of certain other companies in lines of business that Moelis deemed relevant;

 

   

reviewed the financial terms of certain other transactions that Moelis deemed relevant;

 

   

reviewed a draft of the merger agreement; and

 

   

conducted such other financial studies and analyses and took into account such other information as Moelis deemed appropriate.

In connection with its review, Moelis did not assume any responsibility for independent verification of any of the information supplied to, discussed with or reviewed by Moelis for the purpose of its opinion and has, with the consent of the Transaction Committee, relied on such information being complete and accurate in all material respects. In addition, with the consent of the Transaction Committee, Moelis did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of Heinz, nor was Moelis furnished with any such evaluation or appraisal. With respect to the Projections Excluding M&A, Moelis assumed, at the direction of the Transaction Committee, that such financial information was reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Heinz as to the future performance of Heinz.

Moelis’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis as of, the date of the opinion. Moelis’ opinion did not address the fairness of the merger or any aspect or implication of the merger to, or any other consideration of or relating to, the holders of any

 

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class of securities, creditors or other constituencies of Heinz, other than the fairness of the merger consideration from a financial point of view to the holders of Heinz common stock. In addition, Moelis did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the merger consideration or otherwise. Moelis was not asked to, nor did it, offer any opinion as to any terms of the merger agreement or any aspect or implication of the merger, except for the merger consideration to the extent expressly specified in Moelis’ opinion. In rendering its opinion, Moelis assumed, with the consent of the Transaction Committee, that the final executed form of the merger agreement would not differ in any material respect from the draft that Moelis reviewed, that the merger would be consummated in accordance with its terms and that the parties to the merger agreement would comply with all the material terms of the merger agreement. Moelis was not authorized to solicit and did not solicit indications of interest in a possible transaction with Heinz from any party. Except as described in this summary, Heinz and the Transaction Committee imposed no other instructions or limitations on Moelis with respect to the investigations made or procedures followed by Moelis in rendering its opinion.

The following is a summary of the material financial analyses presented by Moelis to the Transaction Committee at its meeting held on February 13, 2013, in connection with its opinion.

Some of the summaries of financial analyses below include information presented in tabular format. In order to fully understand Moelis’ analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis’ analyses.

Unless the context indicates otherwise, forward-looking financial data for Heinz were based on the Projections Excluding M&A, which are described under “—Certain Financial Projections” beginning on page [] of this proxy statement, and other information and data provided by Heinz management. Such information excluded estimated effects of Heinz’s proposed emerging markets’ acquisition program. Enterprise values described below for Heinz are based on debt, cash and cash equivalents and non-controlling interests book values as of October 28, 2012 and, in the case of debt amounts, exclude (i) $114 million outstanding under Heinz’s receivables securitization facility and (ii) an estimated $48 million earn-out amount payable in connection with the Foodstar Holdings Pte Ltd. acquisition.

 

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Selected Public Companies Analysis. Moelis reviewed financial and stock market information of those publicly traded large companies that have significant food businesses that Moelis deemed generally comparable to Heinz in product mix and geographic scope. Moelis reviewed, among other things, enterprise values (“EV”) of the selected companies (calculated as market value of the relevant company’s diluted common equity based on its closing stock price on February 8, 2013, plus preferred stock, plus, as of the relevant company’s most recently reported quarter end, debt, less cash and cash equivalents, plus book value of non-controlling interests) as a multiple of estimated earnings before interest, taxes, depreciation, amortization, and stock-based compensation expense (“EBITDA”) for calendar year 2013. Moelis also reviewed closing stock prices of the selected companies on February 8, 2013 as a multiple of estimated earnings per share for calendar year 2013, such multiple referred to here as “P/E.” Financial data for the selected companies were based on publicly available consensus research analysts’ estimates, public filings and other publicly available information. In addition, Moelis reviewed, among other things, the corresponding EV/EBITDA and P/E multiples for calendar year 2013 of Heinz, based on (i) Heinz management estimates and (ii) publicly available consensus research analysts’ estimates for Heinz. The list of selected companies and the related multiples for such selected companies are set forth below:

 

Company    EV      EV/EBITDA         
      ($ in millions)      2013E      P/E 2013E  

Nestlé S.A.

   $ 233,969         11.3x         17.6x   

PepsiCo, Inc.

     135,550         10.3x         16.5x   

Unilever plc

     123,112         10.5x         17.8x   

Mondelēz International, Inc.

     75,436         12.6x         17.6x   

Groupe Danone S.A.

     50,478         10.0x         16.0x   

Kraft Foods Group, Inc.

     37,387         11.1x         17.4x   

General Mills, Inc.

     37,561         10.4x         15.2x   

Kellogg Company

     29,064         10.8x         15.4x   

The Hershey Company

     19,605         12.5x         22.1x   

ConAgra Foods, Inc.1

     24,429         9.5x         12.8x   

Campbell Soup Company

     16,281         9.9x         14.6x   

The J.M. Smucker Company

     11,639         9.3x         16.2x   

McCormick & Company, Incorporated

     9,614         13.0x         19.6x   

Hormel Foods Corporation

     8,990         9.9x         18.0x   

1Financial data were pro forma for the Ralcorp acquisition.

  

This analysis indicated the following mean and median multiples for the selected companies and for Heinz:

 

Selected Public Companies

      

Heinz –
Management

 

     

Heinz – Street

 

      Mean    Median         

EV/EBITDA

                 
   2013E    10.8x    10.5x      11.1x     11.2x

P/E

                 
   2013E    16.9x    16.9x      16.4x     16.4x

Moelis then used its professional judgment and experience to apply ranges of selected multiples derived from the selected companies of (i) 9.5x to 11.5x, in the case of the EV/EBITDA multiple for calendar year 2013, and (ii) 16.0x to 18.0x, in the case of the P/E multiple for calendar year 2013 to corresponding financial data of

 

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Heinz. This analysis indicated the following implied per share reference ranges for Heinz (rounded to the nearest $0.25), as compared to the per share merger consideration:

 

Implied Per Share Reference Ranges Based On:

       

 

EV/EBITDA

 

 

 

P/E

 

     

 

Merger Consideration

 

$50.50–$63.50

  $59.50–$67.00     $72.50

Selected Precedent Transactions Analysis. Moelis reviewed financial information of those transactions announced between 2000 and 2012 involving large target companies with significant food businesses that Moelis deemed generally comparable to Heinz in product mix and geographic scope. Moelis reviewed, among other things, transaction values of the selected transactions and the merger as a multiple of EBITDA for the most recently completed twelve-month period (“LTM”) for which financial information had been made public at the time of the announcement of each transaction, unless otherwise noted. Financial data for the selected transactions were based on publicly available information at the time of announcement of the relevant transaction. The list of selected transactions and the related multiples are set forth below:

 

Date
Announced
   Target    Acquiror    EV
($ in thousands)
     EV/LTM
EBITDA
 

Dec. 2012

   Morningstar Foods, LLC    Saputo Inc.    $ 1,450         9.3x   

Nov. 2012

   Ralcorp Holdings, Inc.    ConAgra Foods, Inc.      6,775         12.1x   

Feb. 2012

   Pringles Business of Procter & Gamble Company    Kellogg Company      2,695         11.1x 1 

June. 2010

   American Italian Pasta Co.    Ralcorp Holdings, Inc.      1,256         8.3x   

Jan. 2010

   North American Frozen Pizza Business of Kraft Food Global, Inc.    Nestlé S.A.      3,700         12.5x   

Nov. 2009

   Birds Eye Foods, Inc.    Pinnacle Foods Group, Inc.      1,371         9.5x   

Sept. 2009

   Cadbury plc    Kraft Foods Inc.      21,395         13.3x   

June 2008

   The Folgers Coffee Company    The J.M. Smucker Company      3,398         8.8x   

Apr. 2008

   Wm. Wrigley Jr. Company    Mars, Incorporated      23,017         18.4x   

Nov. 2007

   Post Foods    Ralcorp Holdings, Inc.      2,642         11.3x 1 

July 2007

   Global Biscuit Business of Groupe Danone S.A.    Kraft Foods Global, Inc.      7,174         13.6x 1 

Feb. 2007

   Pinnacle Foods Group, Inc.    The Blackstone Group, L.P.      2,142         8.9x   

Aug. 2006

   European Frozen Foods Division of Unilever plc    Permira Advisors Ltd.      2,199         9.9x 1 

Aug. 2006

   Chef America, Inc.    Nestlé S.A.      2,600         14.5x   

Dec. 2002

   Adams Confectionary Business of Pfizer Inc.    Cadbury Schweppes plc      3,750         12.8x 1 

Oct. 2001

   The Pillsbury Company    General Mills, Inc.      10,396         10.1x 2 

Dec. 2000

   The Quaker Oats Company    PepsiCo, Inc.      14,010         15.6x   

Oct. 2000

   Keebler Foods Company    Kellogg Company      4,469         10.7x   

June 2000

   Nabisco Holdings Corp.    Philip Morris Companies Inc.      19,017         13.7x   

June 2000

   International Home Foods    ConAgra Foods, Inc.      2,909         8.5x   

May 2000

   Bestfoods    Unilever plc      23,503         14.5x   

1 Financial data were based on latest available fiscal year end information; not latest quarter-end information.

2 Financial data reflected revised deal terms pursuant to a second amended merger agreement.

 

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This analysis indicated the following mean and median multiples for the selected transactions and the merger were as follows:

 

Selected Transactions

 

     

The Merger

 

           Mean    Median        

EV/LTM

EBITDA

  

(all

transactions)

         
      11.8x    11.3x     13.7x

EV/LTM

EBITDA

  

(transactions

since 2009)

         
      10.9x    11.1x     13.7x

Moelis then used its professional judgment and experience to apply a range of selected multiples derived from the selected transactions of 11.0x to 14.0x LTM EBITDA to Heinz’s LTM EBITDA as of the announcement date of the merger. This analysis indicated the following implied per share reference range for Heinz (rounded to the nearest $0.25), as compared to the per share merger consideration:

 

Implied Per Share Equity

Reference Range

  

Merger Consideration

 

$56.00–$74.25

   $72.50

Discounted Cash Flow Analysis. Moelis performed a discounted cash flow (“DCF”) analysis of Heinz using the Projections Excluding M&A, which are described under “—Certain Financial Projections” beginning on page [] of this proxy statement, and other information and data provided by Heinz management to calculate the present value of the estimated future unlevered free cash flows projected to be generated by Heinz. In performing the DCF analysis of Heinz, Moelis used a range of discount rates of 5.5% to 7.0%, based on Heinz’s estimated weighted average cost of capital (applying the Capital Asset Pricing Model and not applying a size premium, in light of Heinz’s market capitalization), to calculate estimated present values as of April 30, 2013 of (i) Heinz’s estimated after-tax unlevered free cash flows for the fiscal years ending April 30, 2014 through 2018, and (ii) estimated terminal values derived by applying a range of multiples of 9.5x to 11.5x to Heinz’s estimated 2018 EBITDA. Estimated tax rates for each fiscal year were based on Heinz management plan tax rates and an estimated 30% tax rate applicable in the terminal year free cash flow. This analysis indicated the following implied per share reference range for Heinz (rounded to the nearest $0.25), as compared to the per share merger consideration:

 

Implied Per Share Equity
Reference Range

  

Merger Consideration

 

$64.00–$81.50

   $72.50

Other Information

Moelis also noted for the Transaction Committee certain additional factors that were not considered part of Moelis’ financial analysis with respect to its opinion but were referenced for informational purposes, including, among other things:

 

   

the closing trading prices for Heinz common stock during certain periods over the two years ended February 8, 2013, which reflected low and high stock prices for the following periods: (i) $47.71 to $61.00 per share for the two-year period ended February 8, 2013; (ii) $51.69 to $61.00 for the one-year period ended February 8, 2013; (iii) $55.06 to $61.00 for the six-month period ended February 8, 2013; (iv) $57.22 to $61.00 for the three-month period ended February 8, 2013; and (v) $58.05 to $61.00 for one-month the period ended February 8, 2013;

 

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the relative price performance of Heinz common stock compared to the average price performance of the selected public companies referenced above with respect to the Selected Public Companies Analysis during certain periods over the two years ended February 8, 2013, which reflected the following price increases for Heinz and its peer group, respectively, during the following periods: (i) 26% and 22% for the two-year period ended February 8, 2013; (ii) 17% and 12% for the one-year period ended February 8, 2013; (iii) 10% and 6% for the six-month period ended February 8, 2013; (iv) 6% and 9% for the three-month period ended February 8, 2013; and (v) 5% and 5% for one-month the period ended February 8, 2013;

 

   

one-year forward stock price targets for Heinz common stock in recently published, publicly available Wall Street research analysts’ reports, which indicated low and high stock price targets ranging from $53.00 to $65.00 per share, with a median price of $61.00 and a mean price of $59.33, and low and high stock price targets discounted to present value (using a 7.1% discount rate based on the estimated cost of equity for Heinz) ranging from approximately $49.51 to $60.71 per share;

 

   

premiums paid in selected transactions with transaction values over $5 billion announced between 2004 and 2012, based on applying selected ranges of implied premiums paid derived from the selected transactions using (i) the latest closing stock prices and (ii) 52-week high closing stock prices, prior to the announcement of the selected transactions; such selected ranges were of 20% to 35% in the case of latest closing prices and 5% to 20% in the case of 52-week high closing prices. Application of such ranges to the closing price of Heinz common stock on February 8, 2013, and the high closing price of Heinz common stock during the 52-week period ended February 8, 2013, indicated implied per share reference ranges for Heinz of approximately $73.09 to $82.23 and $64.05 to $73.20, respectively.

Miscellaneous

This summary of the analyses is not a complete description of Moelis’ opinion or the analyses underlying, and factors considered in connection with, Moelis’ opinion. The preparation of a fairness opinion is a complex analytical process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Moelis’ opinion. In arriving at its fairness determination, Moelis considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Rather, Moelis made its fairness determination on the basis of its experience and professional judgment after considering the results of all of its analyses.

No company or transaction used in the analyses described above is identical to Heinz or the merger. In addition, such analyses do not purport to be appraisals, nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by such analyses. Because the analyses described above are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, neither Heinz, nor Moelis or any other person assumes responsibility if future results are materially different from those forecast.

The merger consideration was determined through arms’ length negotiations between Heinz and the Investors, and was approved by the Transaction Committee. Moelis did not recommend any specific consideration to Heinz, the Transaction Committee or the Heinz Board, or that any specific amount or type of consideration constituted the only appropriate consideration for the merger.

Moelis acted as financial advisor to the Transaction Committee in connection with the merger and will receive a fee for its services, currently expected to be $10,000,000 in the aggregate, $1,000,000 of which became payable on execution of the engagement letter between Moelis and the Transaction Committee, $4,000,000 of

 

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which became payable in connection with the delivery of Moelis’ opinion, regardless of the conclusion reached therein, and the remainder of which is contingent upon completion of the merger. In addition, Heinz has agreed to indemnify Moelis for certain liabilities, including liabilities under the federal securities laws, arising out of its engagement.

In the two years prior to delivery of its opinion, Moelis did not receive and is not currently entitled to receive any fees for services rendered from Heinz, the Investors or any of their respective affiliates.

Moelis’ affiliates, employees, officers and partners may at any time own securities of Heinz and its affiliates, or of affiliates of the Investors. Moelis in the future may provide investment banking and other services to Heinz, the Investors and their respective affiliates and may receive compensation for such services.

The Transaction Committee selected Moelis as its financial advisor in connection with the merger because Moelis has substantial experience in similar transactions. Moelis is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, strategic transactions, corporate restructurings, and valuations for corporate and other purposes.

Certain Financial Projections

Heinz does not generally publish detailed business plans and strategies or make external disclosures of its anticipated financial position or results of operations other than providing, from time to time, estimated ranges of certain expected financial results and operational metrics in its regular earnings press releases and other investor materials. In connection with the evaluation of a possible transaction, Heinz’s management prepared a forecast for fiscal year 2013 (which forecast included seven months of actual results and is referred to as the “2013 Forecast”) and two sets of projections for the following five fiscal years. The first set of projections (the “Projections Excluding M&A”) assumed that Heinz would not make any acquisitions in emerging markets during the time period covered, and the second set of projections (the “Projections Including M&A”) assumed that Heinz would continue to complete bolt-on acquisitions in emerging markets during the time period covered in line with recent practice. The 2013 Forecast, the Projections Excluding M&A and the Projections Including M&A are collectively referred to as the “Financial Forecasts.” None of the Financial Forecasts were intended for public disclosure.

Heinz’s management provided the Heinz Board, in connection with their evaluation of a potential transaction with the Investors, with certain projections from the Financial Forecasts, which are summarized below. These projections were initially provided to the Heinz Board on January 21, 2013 and reviewed at its special meeting on that date, and portions of these projections were reviewed by the Heinz Board again in considering the potential transaction at the special meetings of the Heinz Board held on January 30 and February 13, 2013, as described in “—Background of the Merger” beginning on page [] of this proxy statement. On February 5, 2013, Heinz provided representatives of 3G Capital with certain extracts from the 2013 Forecast and the Projections Excluding M&A for fiscal year 2018. In addition, the Financial Forecasts were provided to the Heinz Board’s and the Transaction Committee’s respective financial advisors and the Projections Excluding M&A were used in the financial analysis presented by the financial advisors to the Heinz Board on January 21, January 25, January 30 and February 13, 2013 as discussed in “—Opinions of Heinz’s Financial Advisors” beginning on page [] of this proxy statement and in the financial analysis presented to the Transaction Committee on January 30 and February 13, 2013 as discussed in “—Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board” beginning on page [] of this proxy statement. The Projections Excluding M&A were used for the financial analysis performed by the financial advisors and in rendering their fairness opinions because they represented Heinz’s existing business and the Projections Including M&A were more speculative, including with respect to the availability, timing, size and financial impact of potential acquisitions. The financial projections included in this proxy statement are presented to give Heinz shareholders access to the financial projections that were made available to the Heinz Board, 3G Capital and the financial advisors of the Heinz Board and the Transaction Committee.

 

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The financial projections were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or United States generally accepted accounting principles (“GAAP”) but, in the view of Heinz management, were prepared on a reasonable basis. The financial projections included in this proxy statement are unaudited. Neither Heinz’s independent registered public accounting firm, nor any other independent auditors, have compiled, examined or performed any procedures with respect to the prospective financial information contained in the financial forecasts, nor have they expressed any opinion or given any form of assurance on the financial forecasts or their achievability. The inclusion of this information in this proxy statement should not be regarded as an indication that Heinz or anyone who received the financial projections then considered, or now considers, the projections to be a reliable prediction of future events, and this information should not be relied upon as such.

The financial projections reflect various estimates and assumptions made by Heinz, all of which are difficult to predict and many of which are beyond Heinz’s control, including, among others, the following assumptions:

 

   

double-digit sales revenue growth in emerging markets,

 

   

low single-digit sales revenue growth in the United States and the United Kingdom,

 

   

relatively flat sales revenue in other developed markets,

 

   

pricing and productivity that slightly outpace inflation,

 

   

fixed costs growth at a rate slower than sales revenue growth,

 

   

capital spending at a rate of 3.5%-4.0% of sales revenue,

 

   

continued improvements in CCC (cash conversion cycle), led by a reduction in DII (days in inventory),

 

   

relatively stable funding of pension plans,

 

   

no effects of potential foreign exchange rate fluctuations, and

 

   

continued bolt-on acquisitions in emerging markets (in the case of the Projections Including M&A).

In addition, except as otherwise noted, the financial projections assume an effective tax rate of 20.5% for fiscal year 2014, 25.1% for fiscal year 2015, 25.9% for fiscal year 2016, 26.1% for fiscal year 2017 and 26.3% for fiscal year 2018 (which tax rates are referred to as the Heinz management plan tax rates). The Heinz management plan tax rates represented Heinz management’s estimate of Heinz’s future tax rates and were selected based on Heinz’s historical effective tax rates, potential for future changes in U.S. and foreign tax laws and potential tax planning opportunities in the future.

The financial projections reflect subjective judgment in many respects and, therefore, are susceptible to multiple interpretations and frequent revisions attributable to the volatility of Heinz’s industry and based on actual experience and business developments. As such, the financial projections constitute forward-looking information and are subject to risks and uncertainties that could cause the actual results to differ materially from the projected results, including, but not limited to, Heinz’s performance and ability to achieve strategic goals over the applicable period, competitive conditions, including competition from lower-priced private label brands, increases in commodity costs and the costs of other inputs, currency rate fluctuations, Heinz’s effective tax rate, industry performance, general business and economic conditions and the factors described under “Risk Factors”

 

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in Heinz’s Annual Report on Form 10-K for the fiscal year ended April 29, 2012, Heinz’s Quarterly Report on Form 10-Q for the fiscal quarter ended January 27, 2013 and in Heinz’s other filings with the SEC. For additional information on factors that may cause Heinz’s future financial results to materially vary from those projected below, see “Cautionary Statement Regarding Forward-Looking Information” on page [] of this proxy statement. The financial projections cannot, therefore, be considered a guarantee of future operating results and should not be relied upon as such.

The financial projections were prepared by Heinz management based on information they had at the time of preparation and are not a guarantee of future performance. The financial projections were, in general, prepared solely for use by the Heinz Board and the financial advisors of the Heinz Board and the Transaction Committee and are subjective in many respects and thus subject to interpretation. The financial projections cover multiple years and such information by its nature becomes less predictive with each succeeding year. Neither Heinz nor any of its affiliates assumes any responsibility for the validity, reasonableness, accuracy or completeness of the financial projections described below. Neither Heinz nor any of its affiliates intends to, and each of them disclaims any obligation to, update, revise or correct the financial projections if any of them are or become inaccurate (even in the short term).

The financial projections should be evaluated, if at all, in conjunction with the historical financial statements and other information regarding Heinz contained in Heinz’s public filings with the SEC. The financial projections do not take into account any circumstances or events occurring after the date they were prepared, including the merger. Further, the financial projections do not take into account the effect of any failure of the merger to be consummated and should not be viewed as accurate or continuing in that context. Heinz shareholders are cautioned not to place undue, if any, reliance on the financial projections included in this proxy statement.

Projections Excluding M&A

The following table summarizes the Projections Excluding M&A (including the 2013 Forecast) that were provided to the Heinz Board:

 

     For Fiscal Year Ending April,  

(dollars in millions,

except per share data)

  2013E     2014P     2015P     2016P     2017P     2018P  

Revenue

    $ 11,675        $ 12,141        $ 12,657        $ 13,112        $ 13,744        $ 14,446   

EBITDA (1)

    2,057        2,195        2,340        2,453        2,613        2,789   

EBIT (2)

    1,705        1,834        1,965        2,061        2,202        2,355   

Fully diluted earnings per share

    $3.58        $3.78        $3.83        $4.00        $4.29        $4.60   

 

 

  (1) Non-GAAP measure. For this purpose, EBITDA represents net income before net interest expense, minority interest expense, income tax and depreciation and amortization.

 

  (2) Non-GAAP measure. For this purpose, EBIT represents net income before net interest expense, minority interest expense and income tax.

 

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Based on the Projections Excluding M&A, the following three sets of free cash flow projections (based on different definitions of free cash flow and different assumed tax rates, as described in the footnotes) were calculated for use by the financial advisors in performing their discounted cash flow analyses, as described under “—Opinions of Heinz’s Financial Advisors” beginning on page [] of this proxy statement and “—Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board” beginning on page [] of this proxy statement, and were provided to the Heinz Board:

 

     Free Cash Flow
For Fiscal Year Ending April,
 

(dollars in millions)

  2014P     2015P     2016P     2017P     2018P  

Management projections (1)

    1,372        1,343        1,401        1,468        1,569   

Adjusted management projections (2)

    1,353        1,321        1,382        1,441        1,539   

Full tax rate projections (3)

    1,061        1,099        1,162        1,217        1,305   

 

 

  (1) Non-GAAP measure. For this purpose, free cash flow represents EBIT, less taxes, plus depreciation and amortization, less capital expenditures, less the amount of any increase or plus the amount of any decrease in net working capital, less the amount of any increase in other current assets, plus the amount of any decrease in other current liabilities. These free cash flow projections were used in the discounted cash flow analysis performed by Centerview and BofA Merrill Lynch and presented in “—Opinions of Heinz’s Financial Advisors—Opinion of Centerview” and “—Opinions of Heinz’s Financial Advisors—Opinion of BofA Merrill Lynch.”

 

  (2) Non-GAAP measure. For this purpose, free cash flow represents EBIT, less taxes, plus depreciation and amortization, less capital expenditures, less the amount of any increase or plus the amount of any decrease in net working capital. These free cash flow projections were used in the discounted cash flow analysis performed by Moelis and presented in “—Opinion of the Financial Advisor to the Transaction Committee of the Heinz Board.”

 

  (3) Non-GAAP measure. For this purpose, free cash flow represents EBIT, less taxes, plus depreciation and amortization, less capital expenditures, less the amount of any increase or plus the amount of any decrease in net working capital, less the amount of any increase in other current assets, plus the amount of any decrease in other current liabilities. Assumes an effective tax rate of 37.5% for each of fiscal years 2014 through 2018 (which tax rates are referred to as the full tax rates). These tax rates assumed that all income is fully taxable at current U.S. federal statutory rates and estimated U.S. state statutory rates. These free cash flow projections, in addition to those assuming the Heinz management plan tax rates, were used in the discounted cash flow analysis performed by Centerview and BofA Merrill Lynch and presented in “—Opinions of Heinz’s Financial Advisors—Opinion of Centerview” and “—Opinions of Heinz’s Financial Advisors—Opinion of BofA Merrill Lynch.”

The following table summarizes the extracts from the 2013 Forecast and the Projections Excluding M&A for fiscal year 2013 that were provided to 3G Capital:

 

     For Fiscal Year
Ending April,
 

(dollars in millions)

        2013E                 2018P        

Revenue

  $   11,675      $   14,446   

Operating Income

    1,724        2,366   

 

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In addition, the following regional/geographic information included in the 2013 Forecast and the Projections Excluding M&A for fiscal year 2018 were provided to 3G Capital.

 

     Revenue for Fiscal Year
Ending April,
 

(dollars in millions)

        2013E                 2018P        

Emerging markets

  $ 2,773      $   5,120   

U.S. / U.K.

    5,534        5,992   

Other developed

    3,368        3,334   

 

 

 

 

   

 

 

 

Total

    11,675        14,446   

Projections Including M&A

The following table summarizes the Projections Including M&A (including the 2013 Forecast) that were provided to the Heinz Board:

 

     For Fiscal Year Ending April,  

(dollars in millions,

except per share data)

  2013E     2014P     2015P     2016P     2017P     2018P  

Revenue

  $   11,675      $   12,291      $   12,975      $   13,618      $   14,461      $   15,399   

EBIT (1)

    1,705        1,845        1,990        2,105        2,268        2,449   

Fully diluted earnings per share

  $ 3.58      $ 3.81      $ 3.89      $ 4.10      $ 4.44      $ 4.82   

 

 

  (1) Non-GAAP measure. For this purpose, EBIT represents net income before net interest expense, minority interest expense and income tax.

The cash flow impact from acquisitions assumed in the Projections Including M&A is as follows:

 

     For Fiscal Year Ending April,  

(dollars in millions)

  2014P     2015P     2016P     2017P     2018P  

Cash used in acquisitions

  $   (300   $   (300   $   (300   $   (300   $   (300

Incremental free cash flow from acquisitions (1)

    11        16        23        32        41   

 

 

  (1) Non-GAAP measure. For this purpose, free cash flow represents EBIT, less taxes, plus depreciation and amortization, less capital expenditures, less the amount of any increase or plus the amount of any decrease in net working capital, less the amount of any increase in other current assets, plus the amount of any decrease in other current liabilities.

As noted in the footnotes to the tables above, certain of the financial information presented are non-GAAP measures. Non-GAAP measures should not be considered in isolated form, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Heinz may not be comparable to similarly titled amounts used by other companies.

 

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Interests of Heinz’s Directors and Executive Officers in the Merger

In considering the recommendation of the Heinz Board to approve the merger agreement, you should be aware that Heinz’s directors and executive officers have interests in the merger that are different from, or in addition to, those of Heinz shareholders generally. The Heinz Board was aware of these interests and considered them, among other matters, in evaluating the merger agreement, in reaching its decision to approve the merger agreement, and in recommending to the Heinz shareholders that the merger agreement be approved. These interests, which are described and quantified below, include the following:

 

   

Pursuant to the merger agreement, the directors and executive officers will be entitled to (i) cashout of their existing shares and existing equity-based awards (except for certain RSUs granted to Messrs. McMenamin, Mullen and Woodward) at the effective time of the merger based on the merger consideration of $72.50 per share, which is the same basis as other equityholders and (ii) continued indemnification and insurance coverage for at least six years after the effective time of the merger.

 

   

Pursuant to the merger agreement, prior to the effective time of the merger, all outstanding awards under Heinz’s total Company Annual Incentive Plan for fiscal year 2013 and its LTPP for fiscal years 2012-2013 and 2013-2014 will be amended to provide that each award will pay out at 100% of the applicable target award. This deemed achievement of target performance was appropriate in light of Heinz’s performance to date and the anticipated impact of the completion of the merger on the applicable performance criteria of these awards. Heinz currently estimates that, but for the proposed merger, the LTPP awards for fiscal years 2012-2013 and 2013-2014 would have paid out at least 100% of the applicable target awards.

 

   

Pursuant to the merger agreement, Heinz will establish two cash-based award programs to be in effect between the start of fiscal year 2014 and the completion of the merger. Executive officers will be eligible to participate in both of these programs. One cash-based award program, the SIP Replacement Awards, will serve as a temporary replacement of the fiscal year 2014 awards that would have otherwise been made under Heinz’s 2013 Stock Incentive Plan, and the other, the LTPP Replacement Awards, will serve as a temporary replacement of the fiscal year 2014 awards that would have otherwise been made under Heinz’s LTPP. In each case, an award recipient must be employed at the effective time of the merger to be eligible for payout of his or her award. The payouts of the SIP Replacement Awards and LTPP Replacement Awards will be prorated based on the period between April 29, 2013 and the effective time of the merger. For the pro rata calculations, 24 months will be used as the base period for LTPP Replacement Awards and 36 months as the base period for SIP Replacement Awards. Thus, assuming the completion of the merger will become effective on August 1, 2013, LTPP Replacement Awards will be prorated by taking the target value of a participant’s LTPP Replacement Award and multiplying it by 3/24ths and SIP Replacement Awards will be prorated by taking the target value of a participant’s SIP Replacement Award and multiplying it by 3/36ths. The aggregate grant date value of the replacement awards (before taking into account any proration) will not exceed $27,717,435 for the SIP Replacement Awards and $17,297,462 for the LTPP Replacement Awards.

 

   

Pursuant to the merger agreement, prior to the effective time of the merger, certain nonqualified deferred compensation plans in which certain Heinz executive officers participate will be amended to vest any accrued but unvested benefits. In addition, pursuant to the merger agreement, these plans and certain other nonqualified deferred arrangements in which executive officers and non-employee directors participate will be terminated and payment of accrued amounts under these plans will be made, in each case, within the first year following the completion of the merger if certain specified conditions are satisfied.

 

   

All of the current executive officers are party to a severance protection agreement. Heinz’s two former named executive officers, Messrs. Milone and O’Hara, are not covered by a severance

 

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protection agreement. Under the severance protection agreements, upon a qualifying termination of employment within the 24 months following the completion of the merger, executive officers will be entitled to cash payments, additional years of credit under supplemental retirement plans and continued health and welfare benefits, and, for certain executive officers, tax reimbursement for golden parachute payments in the event certain excise taxes are triggered. Heinz does not currently anticipate such excise taxes being triggered and, thus, does not expect to make tax gross-up payments to any of the executive officers. Eight of the executive officers entered into their severance protection agreements in 2007 or earlier, and three executive officers entered into their agreements in February 2013. The agreements entered into in February of 2013 do not provide for any tax reimbursement.

It is possible that, prior to the completion of the merger, some or all of Heinz’s executive officers may discuss or enter into agreements, arrangements or understandings with Parent or Merger Sub or any of their respective affiliates regarding their continuing employment with the surviving corporation or one or more of its affiliates. However, as of the date of this proxy statement, such discussions have not occurred and such agreements have not been entered or discussed. No framework regarding compensation has been provided by Parent or Merger Sub beyond what is provided for in the merger agreement. See “The Merger Agreement—Employee Matters,” beginning on page [] of this proxy statement for a summary of Parent’s obligations to Heinz’s employees during the first year following the completion of the merger.

Golden Parachute Compensation

The table below sets forth, for each of Heinz’s three current named executive officers and two former named executive officers, estimates of the amounts of compensation that are based on, or otherwise relate to, the merger and that may become payable to the executive officer on a qualifying termination of employment in connection with the merger. Heinz shareholders are being asked to approve, on a non-binding, advisory basis, such compensation for these executive officers (see section entitled “Advisory Vote on Named Executive Officer Merger-Related Compensation Arrangements” beginning on page [] of this proxy statement). Because the vote to approve such compensation is advisory only, it will not be binding on either Heinz or Parent. Accordingly, if the merger agreement is approved at the special meeting (or any adjournment thereof) and the merger is completed, the compensation will be payable regardless of the outcome of the vote to approve such compensation, subject only to the conditions applicable thereto, which are described in the footnotes to the table.

The table also sets forth estimates of the amounts of such compensation for Heinz’s eight other executive officers who are not named executive officers. Heinz shareholders are not being asked to approve such compensation for these executive officers.

In the table below, the prorated fiscal year 2014 bonus under the Annual Incentive Plan and the prorated SIP Replacement Awards and LTPP Replacement Awards within the “Cash” column, all amounts in the “Equity” column and the prorated target fiscal year 2013-2014 LTPP awards within the “Other” column are payable on a “single-trigger” basis (i.e., based on a change in control alone, regardless of whether or not the executive officer continues in his or her job after the date of the change in control). The vesting and payment details of the amounts in the “Pension/NQDC” column are discussed in footnote 3 to the table below, beginning on page [] of this proxy statement. The target fiscal year 2013 bonus under the Annual Incentive Plan and target fiscal year 2012-2013 LTPP awards within the “Other” column will be earned and paid before the effective time of the merger. All other amounts are payable on a “double-trigger” basis (i.e., where there is a change in control and the executive officer’s employment is involuntarily terminated by Heinz without cause within 24 months of the change in control).

The table below assumes that the completion of the merger, which will qualify as a change in control of Heinz, will become effective on August 1, 2013 and that, for purposes of the table, the employment of each executive officer will be involuntarily terminated on that date. A termination of employment by the executive officer for good reason on that date will yield the same results, except that the previously granted retention RSU

 

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awards for Messrs. McMenamin, Mullen and Woodward will not vest and will instead be forfeited. The actual date of the completion of the merger will depend, among other things, upon the satisfaction of conditions described in “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement.

See the footnotes to the table for additional assumptions.

 

Name

   Cash($)(1)      Equity($)(2)      Pension/NQD
C($)(3)
     Perquisites /
Benefits(4)
     Tax
Reimburse-
ment($)(5)
     Other($)(6)      Total($)  

Current Named Executive Officers

                    

William R. Johnson, Chairman, President and Chief Executive Officer

    $ 15,918,542        $ 30,471,527                $ 995,129                $ 8,594,375        $ 55,979,573   

Arthur B. Winkleblack, Executive Vice President and Chief Financial Officer

     $ 4,804,581        $ 7,471,173        $ 1,512,483        $ 130,914                $ 1,607,344        $ 15,526,495   

David C. Moran, Executive Vice President, President and Chief Executive Officer of Heinz Europe and Global Infant/Nutrition

    $ 4,774,213        $ 7,628,814        $ 1,281,413        $ 167,520                $ 1,631,156        $ 15,483,116   

Former Named Executive Officers

                    

Michael D. Milone, Former Executive Vice President, Rest of World, Global ERM & Global Infant/Nutrition (a) (c)

    $        $ 4,520,363                 $                $ 531,250        $ 5,051,613   

C. Scott O’Hara, Former Executive Vice President & President and Chief Executive Officer of Heinz North America (b) (c)

    $        $ 5,093,624                $                $ 793,156        $ 5,886,780   

Other Executive Officers

                    

Theodore N. Bobby, Executive Vice President, General Counsel and Corporate Secretary

    $ 3,408,215        $ 5,331,220        $ 456,124        $ 167,983                $ 1,143,000        $ 10,506,542   

Stephen S. Clark, Senior Vice President—Chief People Officer

    $ 2,067,915        $ 3,056,392        $ 1,177,932        $ 31,164                $ 857,750        $ 7,191,153   

Edward J. McMenamin, Senior Vice President—Finance

    $ 3,224,911        $ 3,919,155        $ 427,289        $ 105,740                $ 912,500        $ 8,589,595   

Michael Mullen, Senior Vice President—Corporate and Government Affairs

    $ 841,280        $ 1,320,800        $ 853,856        $ 26,880                $ 415,500        $ 3,458,316   

Margaret R. Nollen, Senior Vice President—Strategy, Investor Relations and Global Program Management

    $ 1,433,241        $ 1,118,034        $ 605,662        $ 35,477                $ 480,240        $ 3,672,654   

Robert P. Ostryniec, Senior Vice President, Chief Supply Chain Officer and Global Enterprise Risk Management, Environmental Health, Safety and Sustainability and Quality

    $ 2,193,381        $ 3,290,456        $ 1,422,517        $ 47,016                $ 909,256        $ 7,862,626   

Christopher J. Warmoth, Executive Vice President—Heinz Asia Pacific

    $ 2,882,178        $ 6,716,615        $ 1,367,506        $ 91,185                $ 1,476,375        $ 12,533,859   

David C. Woodward, Executive Vice President & President and Chief Executive Officer of Heinz North America

    $ 2,592,127        $ 5,615,152        $ 156,242        $ 45,806                $ 1,147,932        $ 9,557,259   

 

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  (a) Mr. Milone ceased to be a Heinz executive officer and employee on June 22, 2012.

 

  (b) Mr. O’Hara ceased to be a Heinz executive officer on June 26, 2012 and ceased to be a Heinz employee on August 1, 2012.

 

  (c) Although Messrs. Milone and O’Hara are no longer employed by Heinz, they hold unvested stock options and RSUs that continue to vest in accordance with their original vesting schedule. These awards remain subject to their compliance with specified covenants, as described in further detail in footnote 2(c) to the table above on page [].

 

  (1) Cash: The amounts in this column reflect the cash severance payment to which the executive officers would be entitled under their severance protection agreements, the prorated fiscal 2014 annual cash bonus award and the prorated SIP Replacement Awards and LTPP Replacement Awards. As described above on page [], the cash severance payment portion is payable on a double-trigger basis. The following table breaks down the amounts in column (1) by type of payment.

 

Name

  Cash
Severance($)(a)
    Prorated Fiscal
Year 2014
Bonus($)(b)
    Prorated SIP
Replacement
Awards ($)(c)
    Prorated LTPP
Replacement
Awards ($)(d)
    Total($)  

Current Named Executive Officers

         

William R. Johnson

   $     14,410,000       $     715,000       $     346,667       $     446,875         $    15,918,542   

Arthur B. Winkleblack

   $ 4,471,299       $ 168,750       $ 92,813       $ 71,719       $ 4,804,581   

David C. Moran

   $ 4,435,994       $ 171,250       $ 94,188       $ 72,781       $ 4,774,213   

Former Named Executive Officers

         

Michael D. Milone

                                  

C. Scott O’Hara

                                  

Other Executive Officers

         

Theodore N. Bobby

   $ 3,171,215       $ 120,000       $ 66,000       $ 51,000       $ 3,408,215   

Stephen S. Clark

   $ 1,893,623       $ 99,875       $ 39,167       $ 35,250       $ 2,067,915   

Edward J. McMenamin

   $ 3,039,494       $ 106,250       $ 41,667       $ 37,500       $ 3,224,911   

Michael Mullen

   $ 757,280       $ 55,125       $ 13,125       $ 15,750       $ 841,280   

Margaret R. Nollen

   $ 1,335,720       $ 63,998       $ 15,238       $ 18,285       $ 1,433,241   

Robert P. Ostryniec

   $ 2,007,130       $ 106,728       $ 41,854       $ 37,669       $ 2,193,381   

Christopher J. Warmoth

   $ 2,576,053       $ 155,000       $ 85,250       $ 65,875       $ 2,882,178   

David C. Woodward

   $ 2,295,877       $ 150,000       $ 82,500       $ 63,750       $ 2,592,127   

 

  (a) The cash severance amount for Messrs. Johnson, Bobby, McMenamin, Moran and Winkleblack is equal to three times the sum of the executive officer’s annual salary and the average of the executive officer’s last three annual cash bonus awards (for fiscal years 2011, 2012 and 2013). The cash severance amount for Messrs. Clark, Mullen, Ostryniec, Warmoth and Woodward and Ms. Nollen is equal to two times the sum of the executive officer’s annual salary and the average of the executive officer’s last three annual cash bonus awards.

 

  (b) The prorated fiscal 2014 bonus is the fiscal 2014 annual cash bonus award prorated to reflect 3 months of the 12-month period.

 

  (c) The prorated SIP Replacement Awards are prorated to reflect 3 months of the 36-month period.

 

  (d) The prorated LTPP Replacement Awards are prorated to reflect 3 months of the 24-month period.

 

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  (2) Equity: The amounts in this column reflect the value of the accelerated vesting of the executive officers’ unvested equity awards that would occur at the effective time of the merger, as provided by the merger agreement. These unvested equity awards were granted prior to the contemplation of the merger. The executive officers were not granted any additional equity awards in connection with the merger. The following table breaks down these amounts by type of award.

 

Name

  Accelerated
Stock
Options($)(a)
    Accelerated
RSUs($)(b)
    Total($)  

Current Named Executive Officers

     

William R. Johnson

   $      24,633,692           $       5,837,835           $      30,471,527        

Arthur B. Winkleblack

   $ 5,459,552           $ 2,011,621           $ 7,471,173        

David C. Moran

   $ 5,576,902           $ 2,051,912           $ 7,628,814        

Former Named Executive Officers

     

Michael D. Milone (c)

   $ 3,415,776           $ 1,104,587           $ 4,520,363        

C. Scott O’Hara (c)

   $ 3,801,884           $ 1,291,740           $ 5,093,624        

Other Executive Officers

     

Theodore N. Bobby

   $ 3,896,531           $ 1,434,689           $ 5,331,220        

Stephen S. Clark

   $ 2,368,599           $ 687,793           $ 3,056,392        

Edward J. McMenamin

   $ 2,881,590           $ 1,037,565           $ 3,919,155        

Michael Mullen

   $ 470,144           $ 850,656           $ 1,320,800        

Margaret R. Nollen

   $ 541,768           $ 576,266           $ 1,118,034        

Robert P. Ostryniec

   $ 2,561,256           $ 729,200           $ 3,290,456        

Christopher J. Warmoth

   $ 4,899,740           $ 1,816,875           $ 6,716,615        

David C. Woodward

   $ 3,163,061           $ 2,452,091           $ 5,615,152        

 

  (a) The value of the accelerated vesting of each stock option award is calculated as the merger consideration of $72.50 per share minus the exercise price of the unvested option, multiplied by the number of shares subject to the award. The incremental value to the executive officers resulting from the completion of the merger (which is not what this table reflects) is the difference between the spread of the option (the difference between the stock price and the exercise price) based on the stock price immediately prior to the announcement of the proposed merger and the spread of the option based on the merger consideration of $72.50 per share.

 

  (b) The value of the accelerated vesting of each RSU is calculated as the merger consideration of $72.50 per share multiplied by the number of unvested RSUs subject to the award, plus all accrued and unpaid dividends on such RSUs. The incremental value to the executive officers resulting from the completion of the merger (which is not what this table reflects) is the difference between the stock price immediately prior to the announcement of the proposed merger and the merger consideration of $72.50 per share.

 

  (c) Although Messrs. Milone and O’Hara are no longer employed by Heinz, they hold unvested stock options and RSUs that continue to vest in accordance with their original vesting schedule. Unvested stock option and RSU awards may be forfeited before the effective time of the merger if they breach the non-solicitation, confidentiality or non-compete covenants set forth in the applicable stock option and RSU award agreements, as applicable.

 

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  (3) Pension/NQDC: The amounts in this column reflect additional age and service credit benefits under Heinz’s supplemental retirement plans, as of August 1, 2013, to which the executive officer would be entitled under his or her severance protection agreement. These benefits are payable on a double-trigger basis. Messrs. Johnson, Bobby, McMenamin, Moran and Winkleblack will receive credit for an additional three years of age and service, and Messrs. Clark, Mullen, Ostryniec, Warmoth and Woodward and Ms. Nollen will receive credit for an additional two years of age and service. Former named executive officers Messrs. Milone and O’Hara are not party to severance protection agreements. The amounts in this column also reflect the value of otherwise unvested nonqualified deferred compensation plan account balances that will vest on a single-trigger basis in connection with the merger (these amounts would have vested under the severance protection agreements). Heinz’s former named executive officers, Messrs. Milone and O’Hara, do not have unvested nonqualified deferred compensation account balances.

For Messrs. Winkleblack, Moran, Bobby, Clark, McMenamin, Mullen and Ostryniec and Ms. Nollen, (i) the estimated Company Contribution Amount (“ CCA”) balances under the Supplemental Executive Retirement Plan were based on the actual CCA balances as of January 31, 2013, projected to August 1, 2013, using the January 31, 2013 Moody’s Aa annualized rate of 3.96% and the applicable contribution credits based on each executive officer’s most recent base rate of pay plus annual bonus and RSUs earned for fiscal 2013; (ii) the estimated cash balance accounts under the Supplemental Executive Retirement Plan were based on the actual January 31, 2013 cash balance accounts, projected to August 1, 2013, using the 5% annualized interest crediting rate specified in the plan and the applicable contribution credits based on each executive officer’s most recent base rate of pay plus annual bonus and RSUs earned for fiscal 2013; (iii) the Plan A benefit offset under the Supplemental Executive Retirement Plan was calculated using the IRS-mandated interest and mortality assumptions under the Pension Protection Act for 2013 lump sum distributions; (iv) the base pay used for the pay continuation was based on the most recent base rate of pay; (v) annual bonus used for the pay continuation was based on the average of the annual bonus payouts for fiscal years 2011, 2012 and 2013; and (vi) annual bonus and RSUs earned for fiscal year 2013 and expected to be paid prior to August 1, 2013 were assumed to be paid at target.

For Mr. Warmoth, the value of additional retirement equivalents under the H J Heinz Company Limited Employer Financed Retirement Benefit Scheme (the “EFRBS”) reflects an additional two years of age and service credit benefits, as of August 1, 2013, to which he would be entitled under his severance protection agreement. The following additional assumptions were used: (i) the estimated CCA balances under the EFRBS were based on the actual CCA balances and Heinz UK (DC) Pension Plan as of January 31, 2013, projected to August 1, 2013, using the January 31, 2013 iBoxx GBP AA Corporate 15+ index annualized rate of 4.3% and the applicable CCA contribution credits are based on his most recent base rate of pay plus annual bonus and RSUs earned for fiscal 2013; (ii) the annual bonus used for the pay continuation was based on the average of the annual bonus payouts for fiscal years 2011, 2012 and 2013; and (iii) the annual bonus and RSUs earned for fiscal year 2013 and expected to be paid prior to August 1, 2013 were assumed to be paid at target.

In addition to the benefits provided under the Supplemental Executive Retirement Plan (or, for Mr. Warmoth, the EFRBS), the CCA balances with appropriate continuation for Messrs. Winkleblack, Moran, Bobby, Clark, McMenamin, Mullen, Ostryniec, Warmoth and Woodward and Ms. Nollen will also be payable. The estimates provided are based on the actual CCA balances as of January 31, 2013, projected to August 1, 2013, using the January 31, 2013 Moody’s Aa annualized rate of 3.96% and the applicable contribution credits based on each executive officer’s most recent base rate of pay plus annual bonus and RSUs earned for fiscal 2013. Contribution credits during the continuation period are based on the most recent base rate of pay plus a bonus amount equal to the average of annual bonus payouts for fiscal years 2011, 2013 and 2013. Interest credited during the continuation period is based on Moody’s Aa annualized rate of 3.96%.

 

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(4)  Perquisites/Benefits: The amounts in this column reflect the value of medical, dental and life insurance benefits to which the executive officers would be entitled under their severance protection agreements. Messrs. Johnson, Bobby, McMenamin, Moran and Winkleblack will receive this coverage for three years following their termination of employment, while Messrs. Clark, Mullen, Ostryniec, Warmoth and Woodward and Ms. Nollen will receive this coverage for two years following their termination of employment. The coverage will terminate if the executive officers become eligible for such coverage from a new employer. Heinz’s former named executive officers, Messrs. Milone and O’Hara, are not entitled to any additional perquisites or benefits as a result of the merger.

The following table breaks down these amounts by type of benefit:

 

Name

  Medical($)     Dental($)     Life Insurance ($)     Total($)  

Current Named Executive Officers

       

William R. Johnson

   $             27,411           $             1,760           $             965,958           $             995,129       

Arthur B. Winkleblack

   $             27,411           $             1,760           $             101,743           $             130,914       

David C. Moran

   $             60,125            *           $             107,394           $             167,520       

Other Executive Officers

       

Theodore N. Bobby

   $             27,411           $             1,760           $             138,812           $             167,983       

Stephen S. Clark

   $             18,274           $             1,173           $             11,717           $             31,164       

Edward J. McMenamin

   $             27,411           $             1,760           $             76,569           $             105,740       

Michael Mullen

   $             18,274           $             1,173           $             7,433           $             26,880       

Margaret R. Nollen

   $             18,274           $             1,173           $             16,030           $             35,477       

Robert P. Ostryniec

   $             18,274           $             1,173           $             27,569           $             47,016       

Christopher J. Warmoth

   $             29,038            *           $             62,147           $             91,185       

David C. Woodward

   $             18,274           $             1,173           $             26,359           $             45,806       

* Messrs. Moran and Warmoth’s dental benefits are included in the amount disclosed in the “Medical” column.

 

  (5) Tax Reimbursement: Under their severance protection agreements, Messrs. Johnson, Bobby, McMenamin, Moran, Winkleblack, Clark, Warmoth and Woodward are entitled to reimbursement of the 20% excise tax that may be imposed on the executive officers under Internal Revenue Code Section 4999 on the value of the payments and benefits that they would receive in connection with the merger. None of the executive officers are expected to be subject to this 20% excise tax and, therefore, Heinz does not anticipate making any tax reimbursement payments to any executive officer.

 

(6) Other: The amounts in this column reflect the value of 100% of the target amounts under Heinz’s existing total Company Annual Incentive Plan awards for fiscal year 2013 and LTPP awards for fiscal years 2012-2013, which will be earned and paid before the effective time of the merger. It is estimated that, in the absence of the merger, amounts under these two plans would have paid out at or around target. The amounts in this column also reflect the value of 100% of target amounts under Heinz’s existing LTPP awards for fiscal years 2013-2014, prorated to reflect the satisfaction of 15/24ths of the performance period from April 30, 2012 through August 1, 2013. The amounts for Messrs. O’Hara, Moran, Warmoth and Woodward under the Annual Incentive Plan for fiscal year 2013 reflect the value of 100% of the target amounts: 50% based on total Company performance and 50% based on the performance of their respective business units. The following table breaks down the amounts in column (6) by type of payment.

 

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Name

   Target Fiscal Year
2013  Total Company
Annual Incentive
Plan
Awards($)
     Target Fiscal Year
2012-2013 LTPP
Awards($)
     Prorated Target
Fiscal Year
2013-2014
LTPP
Awards($)(a)
     Total($)  

Current Named Executive Officers

           

William R. Johnson

    $             2,860,000        $             3,500,000        $             2,234,375        $             8,594,375   

Arthur B. Winkleblack

    $             675,000        $             573,750        $             358,594        $             1,607,344   

David C. Moran

    $             685,000        $             582,250        $             363,906        $             1,631,156   

Former Named Executive Officers

           

Michael D. Milone (b)

            $             531,250                $             531,250   

C. Scott O’Hara (b)

    $             170,000        $             578,000        $             45,156        $             793,156   

Other Executive Officers

           

Theodore N. Bobby

    $             480,000        $             408,000        $             255,000        $             1,143,000   

Stephen S. Clark

    $             399,500        $             282,000        $             176,250        $             857,750   

Edward J. McMenamin

    $             425,000        $             300,000        $             187,500        $             912,500   

Michael Mullen

    $             220,500        $             120,000        $             75,000        $             415,500   

Margaret R. Nollen

    $             255,990        $             138,000        $             86,250        $             480,240   

Robert P. Ostryniec

    $             426,912        $             294,000        $             188,344        $             909,256   

Christopher J. Warmoth

    $             620,000        $             527,000        $             329,375        $             1,476,375   

David C. Woodward

    $             565,000        $             290,744        $             292,188        $             1,147,932   

 

  (a) The prorated Target Fiscal Year 2013-2014 LTPP Awards are prorated to reflect 15 months of the 24-month period.

 

  (b) Mr. Milone is entitled to an LTPP award for fiscal 2012-2013 under the terms of his LTPP award agreement. Under the terms of Mr. O’Hara’s separation agreement, he is entitled to a prorated 3/12ths award under the 2013 Annual Incentive Plan, an LTPP award for fiscal years 2012-2013 and a prorated 3/24ths payment of his LTPP award for fiscal years 2013-2014.

Vested Equity Interests of Heinz’s Executive Officers and Non-Employee Directors

The following table sets forth the number of shares of Heinz common stock and the number of shares of Heinz common stock underlying stock options and deferred RSUs currently held by each of Heinz’s executive officers and non-employee directors, in each case that either are currently vested or that are scheduled to vest before the effective time of the merger, assuming that the effective time of the merger occurs on August 1, 2013, whether or not the merger is completed. The table also sets forth the values of these vested shares, stock options and RSUs based on the $72.50 per share merger consideration (minus the applicable exercise price for the options) and, in the case of non-employee directors, any deferred director fees. For the values of the executive officers’ unvested equity awards, see the “Equity” column of the table under “—Golden Parachute Compensation” beginning on page [] of this proxy statement. Non-employee directors hold no unvested equity awards. No new shares of Heinz common stock were granted to any executive officer or non-employee director in contemplation of the merger. The incremental value to the executive officers and non-employee directors resulting from the completion of the merger (which is not what the following table reflects) in respect of vested shares and deferred RSUs is the difference between the stock price immediately prior to the announcement of the proposed merger and the merger consideration of $72.50. The incremental value to the executive officers and non-employee directors resulting from the completion of the merger (which is not what the following table reflects) in respect of vested options is the difference between the spread of the vested options based on the stock price immediately prior to the announcement of the proposed merger and the spread of the vested options based on the merger consideration of $72.50 per share.

 

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Name

  Vested Shares
(#)(1)
    Vested Shares
($)(1)
    Vested
Options
(#)(2)
    Vested Options
($)(2)
    Deferred
RSUs
(#)(3)
    Deferred
RSUs
($)(3)
    Total Vested
Equity($)
 

Current Named Executive Officers

             

William R. Johnson

    802,956      $   58,214,310        815,104      $   18,346,067        318,862      $   23,117,495      $   99,677,872   

Arthur B. Winkleblack

    75,149      $   5,448,303        197,636      $ 4,789,278        116,009      $ 8,410,653      $ 18,648,233   

David C. Moran

    53,788      $   3,899,630        173,230      $ 3,912,223        107,007      $ 7,758,008      $ 15,569,860   

Former Named Executive Officers

             

Michael D. Milone

    81,404  (a)    $ 5,901,790  (a)      182,183  (b)    $ 4,371,965  (b)      —  (b)      —  (b)    $ 10,273,755   

C. Scott O’Hara

    85,548  (c)    $ 6,202,230  (c)       (d)       (d)      —  (d)      —  (d)    $ 6,202,230   

Other Executive Officers

             

Theodore N. Bobby

    46,705      $ 3,386,113        151,440      $ 3,758,911        41,592      $ 3,015,420      $ 10,160,444   

Stephen S. Clark

    26,978      $ 1,955,905        59,044      $ 1,464,941                    $ 3,420,846   

Edward J. McMenamin

    27,345      $ 1,982,513        105,270      $ 2,548,184        51,009      $ 3,698,153      $ 8,228,849   

Michael Mullen

    11,690      $ 847,525        7,903      $ 191,189                    $ 1,038,714   

Margaret R. Nollen

    22,862      $ 1,657,495        9,130      $ 220,950                    $ 1,878,445   

Robert P. Ostryniec

    28,342      $ 2,054,795        61,258      $ 1,448,509                    $ 3,503,304   

Christopher J. Warmoth

    65,161      $ 4,724,173        137,300      $ 3,944,930        38,594      $ 2,798,065      $ 11,467,167   

David C. Woodward

    27,345      $ 1,982,513        35,214      $ 845,171                    $ 2,827,684   

Non-Employee Directors

             

Charles E. Bunch

    29,250      $ 2,120,625                                  $ 2,120,625   

Leonard S. Coleman, Jr.

    22,600      $ 1,638,500                      9,750      $ 706,875      $ 2,345,375   

John G. Drosdick

                                21,750      $ 1,576,875      $ 1,576,875   

Edith E. Holiday

    5,600      $ 406,000                      24,250      $ 1,758,125      $ 2,164,125   

Candace Kendle

    39,090      $ 2,834,025                                  $ 2,834,025   

Franck J. Moison

                                                

Dean R. O’Hare

    32,450      $ 2,352,625                                  $ 2,352,625   

Nelson Peltz

    3,250  (e)    $ 235,625  (e)                                $ 235,625   

Dennis H. Reilly

                                21,750      $ 1,576,875      $ 1,576,875   

Lynn C. Swann

    15,750      $ 1,141,875                                  $ 1,141,875   

Thomas J. Usher

    4,413      $ 319,943