Heinz agrees to give buyout data to shareholders

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Attorneys for H.J. Heinz agreed Tuesday to turn over board minutes and other documents related to the proposed $28 billion buyout of the Pittsburgh ketchup maker to shareholders questioning the transaction.

The offer was made during a hearing before Allegheny County Common Pleas Judge Christine A. Ward, who agreed to consolidate nine lawsuits brought by shareholders after the buyout was announced Feb. 14. Two dozen attorneys attended the hearing.

The lawsuits allege the Heinz directors who negotiated and approved the deal violated their fiduciary duties to shareholders by not pursuing other offers and by agreeing to pay Berkshire Hathaway and 3G Capital, Heinz's proposed buyers, $750 million if they accept an offer from another bidder.

The lawsuits also allege a proxy statement sent to shareholders asking them to approve the buyout omits and misrepresents information about events leading up to the offer as well as how Heinz determined the offer was fair. One lawsuit described the negotiations as "a flawed process" designed to sell Heinz at terms favorable to Berkshire Hathaway and 3G Capital and unfavorable to shareholders.

Similar lawsuits have been filed in federal court Downtown.

The $28 billion price tag on Heinz includes $5 billion in existing Heinz debt that would be assumed by Berkshire Hathaway, which is controlled by investor Warren Buffett, and 3G Capital, a New York private equity firm.

Shareholders, who will receive $72.50 in cash for each of their Heinz shares, are scheduled to vote on the offer April 30.

The confidential materials to be turned over to shareholder attorneys include draft sales agreements, due diligence materials used to evaluate the offer, and minutes of meetings of a board-appointed committee responsible for the negotiations as well as minutes of meetings of the full Heinz board.

Depositions of individuals involved in the negotiations, including Heinz chairman, CEO and president William R. Johnson, will be delayed until after April 12. That's when a board committee appointed by Heinz to investigate the allegations made in the lawsuits is scheduled to issue a report. The report will be shared with attorneys for the shareholders who are suing, as well as with Judge Ward.

Among other things, the lawsuits before Judge Ward seek to stop the sale until Heinz honors its duties to shareholders and has made full and fair disclosure. They also seek damages if the sale proceeds before the lawsuits are resolved.

Judge Ward agreed to hold a hearing April 29 if attorneys for shareholders seek a preliminary injunction to stop the transaction.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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