“I’ve always been more of a Heinz man,” said Quentin L’Helias, head of EMEA structured finance and loan syndication at Société Générale in Paris. This, it turned out, was not a statement about the relative merit of either of the two companies, but a fond reminiscence on one product in particular.
“As kids we couldn’t get enough of Heinz Ketchup,” he said. “We spent a lot of time going over to Canada, so when we returned to France we would bring about two gallons of the stuff back with us. You could get ketchup in France, but it wasn’t Heinz and so just wouldn’t do. My brother insisted on smothering everything he ate with ketchup. It was kinda disgusting.”
Loan Ranger was amazed to hear that such a country without Heinz ketchup could exist – especially as this was the country that had supposedly given the world French fries. Even that, however, is a source (pun alert) of contention, with the French and the Belgians willing to go to war if we keep talking about it.
And France has a turbulent recent past when it comes to ketchup. In 2011, the country provoked a storm of words from England’s wordsmiths more sharply pointed than the arrows of Henry V’s archers when it callously banned ketchup from schools.
Heinz doesn’t just bring such signature products to the merger, however. It brings a host of memorable catchphrases. Sadly for Loan Ranger, “Beanz meanz loanz” will not be the case this time, since no new debt is involved in the deal. It’s an all equity affair that will reduce the company’s eight times leverage to around five times. So much for slogans.
Heinz is, however, well known in the debt market precisely for that high leverage. In 2013 it completed $13.6bn of loans to back its $27.5bn leveraged buyout by 3G and Berkshire Hathaway. So good things [may] come to those who wait...
But it’s good to know that the deal will still hold importance and flavour for at least some loans bankers. “Le mythe de votre ketchup préféré” proclaims the French version of Heinz’s website.
“I’ve never heard that in my life,” said a Frenchman to Loan Ranger’s left, who insists that ketchup is a national staple probably dating back to Napoleon. After all, they have, y’know… McDonalds…
And it’s not only the French who have cultural questions at stake about this merger. Food analysts in the US have claimed it was brought together by the rapidly changing habits in what Americans want to eat and the “de-inventorying of the American larder”.
De-inventorying is something that any investment banker can relate to these days.
But what seems likely is that the Heinz-Kraft tie up could usher in a new era of consolidation.
We are, of course, assuming that the merger does complete from here. Another great catchphrase, which became L’Helias’ motto in life from a young age, serves to explain why a last minute retreat by Kraft is impossible:
“There are no other kinds, once you’ve tasted Heinz”.
