Pittsburgh\'s Time of Transition

The sprawling H. J. Heinz headquarters in Pittsburgh was turned into apartment lofts for the city’s growing creative class long ago. The famous five-story neon ketchup bottle that stood outside the headquarters has been moved to the wall of the city’s history museum.

The corporate remnant of Heinz that is still left in Pittsburgh is passing into the faraway hands of its new acquirers, Warren E. Buffett’s Nebraska conglomerate and a Brazilian investment firm. The new owners promised to maintain the offices in Pittsburgh, but Heinz has been in the process of leaving the city for a long time.

It is a story that the city knows well by now, as it has transitioned from one of the great hubs of corporate and industrial America to a new economy based on small technology and medical companies with unfamiliar names. It is only somewhat of a coincidence that on the same day as Heinz’s announcement, US Airways, which grew out of the old Pittsburgh carrier Allegheny Airlines, said it was merging wih American Airlines, a Texas-based company.

Heinz is the latest in a long list of prominent American companies that have significantly reduced, or all together eliminated, their presence in the Pittsburgh area, erstwhile giants like U.S. Steel and Gulf Oil, which were among the nation’s 10 largest in 1955, according to David Hounshell, a professor at Carnegie Mellon University. Now there are none among America’s 100 largest companies.

But in the course of reducing it reliance on industry and big corporations, Pittsburgh has become one of the more envied stories of urban revival in the Rust Belt. The proportion of Pittsburgh’s work force in manufacturing is now actually lower than the national average, according to Christopher Briem, a University of Pittsburgh professor. But so is its unemployment rate, at 7.2 percent.

Like other historic names of the city â€" like Carnegie, Mellon and Frick â€" the Heinz brand still courses through the civic blood of Pittsburgh’s heart. Its ! name is on the local concert hall and the Steeler’s football stadium. The city still identifies with its past image as a pug-nosed, beer-swilling metropolis, even as it markets itself as a hub for technology, medicine and finance.

“We have a really diversified economy now, and yet still maintain our industrial heritage,” said Yarone Zober, the chief of staff to Pittsburgh Mayor Luke Ravenstahl. “Whether they make another bottle of ketchup here â€" they are still Pittsburgh.”

Henry J. Heinz was firmly in the mold of the other entrepreneurs who built Pittsburgh’s manufacturing core. He turned peddling horseradish from his mother’s garden into a factory complex on the Allegheny River. He was one of many magnates to see the transportation advantages of Pittsburgh’s three rivers.

Andrew Carnegie used the rivers and the local coal deposits to build the colossus of the Pittsburgh economy, the company that would become known as U.S. Steel. The soot churned out by steel manufacturin turned Pittsburgh into the butt of many jokes, but the industry also served as the spine of the city’s corporate economy.

The Pittsburgh machine was stumbling in the 1970s as factories came under pressure from lower-wage workers around the world. The city began to empty out and local corporations looked elsewhere. Heinz moved its ketchup manufacturing operation to Ohio and scattered the rest of its United States production. For a while it looked like the city was doomed.

But over the last two decades it has undergone a recovery that many other struggling cities in Middle America look to emulate. It has been led by the University of Pittsburgh and Carnegie Mellon, which have built research facilities where the old mills once were. The University of Pittsburgh Medical Center is now the largest employer in the region and has its acronym atop the old U.S. Steel skyscraper.

The tight-knit neighborhoods and cultural institutions paid for by the old magnates have also helped it attract ! outside f! irms. Google decided in 2009 to move a big work force into an old Nabisco plant in the city.

Heinz has its corporate staff of 1,200 based mostly in the skyscraper built by another local icon, Pittsburgh Plate Glass. But perhaps the biggest Heinz influence now comes from the foundations and endowments that were set up by the heirs to the Heinz fortunes.

“The headquarters are here, and those are real jobs,” said Mr. Briem. “But in terms of the mythos of Pittsburgh as a manufacturing city, Heinz is no longer here.”

Confidence on Upswing, Mergers Make Comeback

The mega-merger is back.

For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and chief executives, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms.

Cycles, however, turn, and in the opening weeks of 2013, merger activity has suddenly roared back to life. On Thursday, Berkshire Hathaway, the conglomerate run by Warren E. Buffett, said it had teamed up with Brazilian investors to buy the kethup maker H. J. Heinz for about $23 billion. And American Airlines and US Airways agreed to merge in a deal valued at $11 billion.

Those transactions come a week after a planned $24 billion buyout of the computer company Dell by its founder, Michael S. Dell, and private equity backers. And Liberty Global, the company controlled by the billionaire media magnate John C. Malone, struck a $16 billion deal to buy the British cable business Virgin Media.

“Since the crisis, one by one, the stars came into alignment, and it was only a matter of time before you had a week like w just had,” said James B. Lee Jr., the vice chairman of JPMorgan Chase.

Still, bankers and lawyers remain circumspect, warning that it is still too early to declare a mergers-and-acquisitions boom like those during the junk bond craze of 1989, the dot-com bubble of 1999 and the leveraged buyout bonanza of 2007. They also say that it is important to pay heed to the excesses that developed during these moments of merger mania, which all ended badly.

Yet a confluence of factors has created a suddenly robust market and driven the recent wave of deals. Most visibly, the stock market has been on a tear, with the Standard & Poor’s 500-stock index this week briefly hitting its highest levels since November 2007. Higher share prices have buoyed the confidence of chief executives, who now, instead of retrenching, are looking for ways to! expand t! heir businesses.

A number of clouds that hovered over the markets last year have also been removed, eliminating the uncertainty that hampered deal making. Mergers and acquisitions activity in 2012 remained tepid as companies took a wait-and-see approach over the outcome of the presidential election and negotiations over the fiscal cliff. The problems in Europe, which began in earnest in 2011, shut down a lot of potential transactions, but the region has since stabilized.

“When we talk to our corporate clients as well as the bankers, we keep hearing them talk about increased confidence,” said John A. Bick, a partner at the law firm Davis Polk & Wardwell, who advised Heinz on its acquisition by Mr. Buffett and his partners.

Mr. Bick said that mega-mergers had a psychological component, meaning that once transactions start happening, chief executives do not want to be left behind. “In the same way that success breeds success, deals breed more deals,” he said.

A central reason fo the return of big transactions is the mountain of cash on corporate balance sheets. After the financial crisis, companies hunkered down, laying off employees and cutting costs. As a result, they generated savings. Today, corporations in the S.& P. 500 are sitting on more than $1 trillion in cash. With interest rates near zero, that money is earning very little in bank accounts, so executives are looking to put it to work by acquiring businesses.

The private equity deal-making machine is also revving up again. The world’s largest buyout firms have hundreds of billions of dollars of “dry powder” â€" money allotted to deals in Wall Street parlance â€" and they are on the hunt. The proposed leveraged buyout of Dell, led by Mr. Dell and the investment firm Silver Lake Partners, was the largest private equity transaction since July 2007, when t! he Blacks! tone Group acquired the hotel chain Hilton Worldwide for $26 billion just as the credit markets were seizing up.

But perhaps the single biggest factor driving the return of corporate takeovers is the banking system’s renewed health. Corporations often rely on bank loans for financing acquisitions, and the ability of private equity firms to strike multibillion-dollar transactions depends on the willingness of banks to lend them money.

For years, banks, saddled by the toxic mortgage assets weighing on their balance sheets, turned off the lending spigot. But with the housing crisis in the rearview mirror and economic conditions slowly improving, banks are again lining up to provide corporate loans at record-low interest rates to finance acquisitions.

The banks, of course, are major beneficiaries of megadeals, earning big fees from both advising on the transactions and lending money to finance them. Mergers and acquisitions in the United States total $158.7 billion so far this year, accoding to Thomson Reuters data, more than double the amount in the same period last year. JPMorgan, for example, has benefited from the surge, advising on four big deals in recent weeks, including the Dell bid and Comcast’s $16.7 billion offer for the rest of NBCUniversal that it did not already own.

Mr. Buffett, in a television interview last month, declared that the banks had repaired thei! r busines! ses and no longer posed a threat to the economy. “The capital ratios are huge, the excesses on the asset aside have been largely cleared out,” said Mr. Buffett, whose acquisition of Heinz will be his second-largest acquisition, behind his $35.9 billion purchase of a majority stake in the railroad company Burlington Northern Santa Fe in 2009.

While Wall Street has an air of giddiness over the year’s start, most deal makers temper their comments about the current environment with warnings about undisciplined behavior like overpaying for deals and borrowing too much to pay for them.

Though private equity firms were battered by the financial crisis, they made it through the downturn on relatively solid ground. Many of their megadeals, like Hilton, looked destined for bankruptcy after the markets collapsed, but they have since recovered. The deals have benefited from an improving economy, as well as robust lending markets that allowed companies to push back the large amounts of debt that were t have come due in the next few years.

But there are still plenty of cautionary tales about the consequences of overpriced, overleveraged takeovers. Consider Energy Future Holdings, the biggest private equity deal in history. Struck at the peak of the merger boom in October 2007, the company has suffered from low natural gas prices and too much debt, and could be forced to restructure this year. Its owners, a group led by Kohlberg Kravis Roberts and TPG, are likely to lose billions.

Even Mr. Buffett made a mistake on Energy Future Holdings, having invested $2 billion in the company’s bonds. He admitted to shareholders last year that the investment was a blunder and would most likely be wiped out.

“In tennis parlance,” Mr. Buffett wrote, “this was a major unforced error.”

Micha! el J. de la Merced contributed reporting.

Confidence on Upswing, Mergers Make Comeback

The mega-merger is back.

For the corporate takeover business, the last half-decade was a fallow period. Wall Street deal makers and chief executives, brought low by the global financial crisis, lacked the confidence to strike the audacious multibillion-dollar acquisitions that had defined previous market booms.

Cycles, however, turn, and in the opening weeks of 2013, merger activity has suddenly roared back to life. On Thursday, Berkshire Hathaway, the conglomerate run by Warren E. Buffett, said it had teamed up with Brazilian investors to buy the kethup maker H. J. Heinz for about $23 billion. And American Airlines and US Airways agreed to merge in a deal valued at $11 billion.

Those transactions come a week after a planned $24 billion buyout of the computer company Dell by its founder, Michael S. Dell, and private equity backers. And Liberty Global, the company controlled by the billionaire media magnate John C. Malone, struck a $16 billion deal to buy the British cable business Virgin Media.

“Since the crisis, one by one, the stars came into alignment, and it was only a matter of time before you had a week like w just had,” said James B. Lee Jr., the vice chairman of JPMorgan Chase.

Still, bankers and lawyers remain circumspect, warning that it is still too early to declare a mergers-and-acquisitions boom like those during the junk bond craze of 1989, the dot-com bubble of 1999 and the leveraged buyout bonanza of 2007. They also say that it is important to pay heed to the excesses that developed during these moments of merger mania, which all ended badly.

Yet a confluence of factors has created a suddenly robust market and driven the recent wave of deals. Most visibly, the stock market has been on a tear, with the Standard & Poor’s 500-stock index this week briefly hitting its highest levels since November 2007. Higher share prices have buoyed the confidence of chief executives, who now, instead of retrenching, are looking for ways to! expand t! heir businesses.

A number of clouds that hovered over the markets last year have also been removed, eliminating the uncertainty that hampered deal making. Mergers and acquisitions activity in 2012 remained tepid as companies took a wait-and-see approach over the outcome of the presidential election and negotiations over the fiscal cliff. The problems in Europe, which began in earnest in 2011, shut down a lot of potential transactions, but the region has since stabilized.

“When we talk to our corporate clients as well as the bankers, we keep hearing them talk about increased confidence,” said John A. Bick, a partner at the law firm Davis Polk & Wardwell, who advised Heinz on its acquisition by Mr. Buffett and his partners.

Mr. Bick said that mega-mergers had a psychological component, meaning that once transactions start happening, chief executives do not want to be left behind. “In the same way that success breeds success, deals breed more deals,” he said.

A central reason fo the return of big transactions is the mountain of cash on corporate balance sheets. After the financial crisis, companies hunkered down, laying off employees and cutting costs. As a result, they generated savings. Today, corporations in the S.& P. 500 are sitting on more than $1 trillion in cash. With interest rates near zero, that money is earning very little in bank accounts, so executives are looking to put it to work by acquiring businesses.

The private equity deal-making machine is also revving up again. The world’s largest buyout firms have hundreds of billions of dollars of “dry powder” â€" money allotted to deals in Wall Street parlance â€" and they are on the hunt. The proposed leveraged buyout of Dell, led by Mr. Dell and the investment firm Silver Lake Partners, was the largest private equity transaction since July 2007, when t! he Blacks! tone Group acquired the hotel chain Hilton Worldwide for $26 billion just as the credit markets were seizing up.

But perhaps the single biggest factor driving the return of corporate takeovers is the banking system’s renewed health. Corporations often rely on bank loans for financing acquisitions, and the ability of private equity firms to strike multibillion-dollar transactions depends on the willingness of banks to lend them money.

For years, banks, saddled by the toxic mortgage assets weighing on their balance sheets, turned off the lending spigot. But with the housing crisis in the rearview mirror and economic conditions slowly improving, banks are again lining up to provide corporate loans at record-low interest rates to finance acquisitions.

The banks, of course, are major beneficiaries of megadeals, earning big fees from both advising on the transactions and lending money to finance them. Mergers and acquisitions in the United States total $158.7 billion so far this year, accoding to Thomson Reuters data, more than double the amount in the same period last year. JPMorgan, for example, has benefited from the surge, advising on four big deals in recent weeks, including the Dell bid and Comcast’s $16.7 billion offer for the rest of NBCUniversal that it did not already own.

Mr. Buffett, in a television interview last month, declared that the banks had repaired thei! r busines! ses and no longer posed a threat to the economy. “The capital ratios are huge, the excesses on the asset aside have been largely cleared out,” said Mr. Buffett, whose acquisition of Heinz will be his second-largest acquisition, behind his $35.9 billion purchase of a majority stake in the railroad company Burlington Northern Santa Fe in 2009.

While Wall Street has an air of giddiness over the year’s start, most deal makers temper their comments about the current environment with warnings about undisciplined behavior like overpaying for deals and borrowing too much to pay for them.

Though private equity firms were battered by the financial crisis, they made it through the downturn on relatively solid ground. Many of their megadeals, like Hilton, looked destined for bankruptcy after the markets collapsed, but they have since recovered. The deals have benefited from an improving economy, as well as robust lending markets that allowed companies to push back the large amounts of debt that were t have come due in the next few years.

But there are still plenty of cautionary tales about the consequences of overpriced, overleveraged takeovers. Consider Energy Future Holdings, the biggest private equity deal in history. Struck at the peak of the merger boom in October 2007, the company has suffered from low natural gas prices and too much debt, and could be forced to restructure this year. Its owners, a group led by Kohlberg Kravis Roberts and TPG, are likely to lose billions.

Even Mr. Buffett made a mistake on Energy Future Holdings, having invested $2 billion in the company’s bonds. He admitted to shareholders last year that the investment was a blunder and would most likely be wiped out.

“In tennis parlance,” Mr. Buffett wrote, “this was a major unforced error.”

Micha! el J. de la Merced contributed reporting.

Blackstone Keeps Most of its Money With SAC

The Blackstone Group, the largest outside investor in the hedge fund SAC Capital Advisors, said it would keep most of its $550 million with the hedge fund for three more months while it monitors developments in the government’s insider trading investigation.

The move by Blackstone comes as SAC’s clients faced a regularly scheduled quarterly deadline on Thursday to decide whether to continue investing with the hedge fund giant run by Steven A. Cohen.

Despite posting one of the best investment track records on Wall Street â€" returning 30 percent annually over the past two decades â€" SAC has been fighting to keep investors’ money amid an intensifying investigation into criminal conduct at the fund. In November, since prosecutors brought its most recent case against Mathew Martoma, a former SAC employee, clients have been weighing whether to continue their relationship with the fund. Mr. Martoma has denied the charges.

Large hedge fund investors like Blackstone rarely make public prnouncements about their intentions, but given the heightened interest in SAC, the investment firm issued a statement explaining the rationale for its decision.

The money that Blackstone did withdraw was done in the normal course of business and unrelated to any of SAC’s problems. Blackstone, which runs the world’s largest so-called fund of funds, placing nearly $50 billion with outside managers, is seen as a bellwether in the hedge fund industry.

“While we submitted redemptions for certain accounts as appropriate, BAAM successfully preserved flexibility for our clients by extending our decision time line,” Peter Rose, a Blackstone spokesman, said in a statement, referring to Blackstone Alternative Asset Management, the segment that invests with hedge funds. “We will use this period of time to evaluate all additional information which becomes available.”

It is unclear what the total amount of money that SAC’s clients redeemed on Thursday. The Stamford, Conn.-based hedge! fund had warned its employees that it expected it could face at least $1 billion of withdrawals. A Citigroup unit that manages money for wealthy families has already disclosed that it was withdrawing its $187 million investment.

While several other former SAC employees have previously been charged with insider trading crimes, the Martoma prosecution has changed clients’ calculus because the trades at the center of the case involve Mr. Cohen. In addition, the Securities and Exchange Commission warned SAC that it might file a civil fraud lawsuit against the fund related to the trades. Mr. Cohen has not been charged and has said that he has acted appropriately at all times.

Federal prosecutors are also nearing a decision whether to bring criminal charges against Michael Steinberg, a longtime SAC portfolio manager, related to trading in the technology stocks Dell and Nvidia. A lawyer for Mr. Steinberg, Barry Berke, said in a statement that his client did absolutely nothing wrong.

Unlike othr hedge funds that can be forced to shut down after a wave of client withdrawals, SAC is in a slightly unusual situation. Only about 40 percent of the $14 billion managed by SAC, or about $6 billion, comes from outside clients. The balance belongs to Mr. Cohen and his well-paid staff.

In addition, SAC has policies in place that limit the amount of money a client can withdraw during any one quarter. Clients can only withdraw 25 percent of their investment every three months. That means if a client put in a so-called redemption request on Thursday, it would receive its money back in quarterly installments beginning March 31, and getting its last dollar out on Dec. 31.

Blackstone negotiated a way to buy itself some time without delaying its ability to withdraw it investment from the fund. SAC agreed to a new redemption policy that it will extend to its other clients, allowing them to keep their money with SAC for another quarter. If after three months, clients then decide to end their relati! onship wi! th SAC, the fund would return their money in three installments.

Under the new policy, SAC is permitting clients to take a wait-and-see approach, monitoring the investigation for developments that could damage the fund. And if they withdraw, they would still have all of their money returned by year-end.

SAC recent investment results have been solid, though it has lagged behind the Standard & Poor’s 500-stock index. The fund returned about 13 percent last year and 2.5 during the first month of 2013.

After Strong I.P.O., Russia\'s Main Stock Exchange Begins Trading

MOSCOW â€" Russia’s main stock exchange has garnered enough investor interest for an initial public offering, another milestone in the country’s capitalist evolution.

The Moscow Exchange, better known by its original name, Micex, for the Moscow Interbank Currency Exchange, is scheduled to begin trading Friday in Moscow on its own trading platform.

The stock will price near the bottom of the expected range, valuing the company at slightly more than $4 billion, a financial industry official briefed on the plan said Thursday evening.

The listing drew interest from specialized investors in financial services companies and institutional investors in the United States and Europe, the official said. Micex has also benefited from the publicity of mergers and acquisitions in the stock exchange business worldwide, including the announced sale of the New York Stock Exchange.

The seesaw fortunes of the Russian companies that list on Micex have made it one of the world’s most volatile markets. From its inception in 1992 until the start of the 2008 recession, the Russian stock market had been in either the top five performing markets in the world or the bottom five in every year except one.

The company managing the exchange, though, has made an argument that it is a far safer bet than the companies it lists because it earns fees on both long and short trades and from foreign currency deals, its original niche.

The Russian central bank founded Micex as a market for trading rubles into foreign currency legally, something that had been tightly regulated in the past. That was the best thing that ever happened to early post-Soviet financiers, who knew which way that bet would go and made easy fortunes on Micex.

The exchange evolved to trade stocks when they appeared in! Russia in the early 1990s and presided over the panic selling of state bonds in the 1998 default. By 2011, it had become the dominant exchange after merging with a rival, the Russian Trading System. The main product of the Russian Trading System was a dollar-denominated derivative of an index fund for the Russian market, used primarily to short the entire country’s economy, a position sometimes used as a hedge by nervous companies making other investments. Last year, this product accounted for 34 percent of all derivatives trades on Micex.

Other revenue streams are interest income from obligatory deposits that brokerage firms place with the exchange to trade, fees charged to issuing companies and data sales.

The central bank will remain the largest shareholder after the issue of 10 to 15 percent of the shares. The organizing banks are expected to announce the size of the float on Friday.

Mattias Westman, founder of Prosperity Capital Management, the largest foreign portfolio investor inRussia, which manages $4.5 billion in stocks and other assets, many of which are traded on Micex, said owning shares in the stock exchange was also a way to bet on the strengthening domestic financial system.

Micex’s offering, he said, “is a symptom of the whole market maturing,” 20 years after the end of the Soviet Union.

Bruce Bower, portfolio manager at Verno Capital, a Russia-focused fund, said the exchange’s mix of offerings for investors wanting either long or short positions, its interest earnings and its fees for currency exchange made it a relatively safe stock as “the financial utility for Russia.”

S.E.C. Is Said to Be Investigating Trading Before Heinz Deal

Regulators are scrutinizing unusual trading ahead of the $23 billion takeover of the food company H.J. Heinz, raising questions about potential illegal activity at play as the deal took shape, a person briefed on the matter said.

The Securities and Exchange Commission opened an insider trading inquiry on Thursday as Berkshire Hathaway and the investment firm 3G Capital agreed to pay $72.50 a share for Heinz, this person said. Regulators first noticed a suspicious spike in trading on Wednesday.

If the S.E.C.’s preliminary inquiry turns into a broader investigation, it could cast a shadow over the deal. As part of the process, authorities would turn their focus toward the limited universe of insiders who could have tipped off traders about the deal.

The agency’s inquiry is said to be centered on options trading in Heinz, activity that soared this week as news of the deal circulated Wall Street. In what’s known as a call option, investors can place a bullish bet on a stock, without acually committing to buy the shares. Instead, investors have the opportunity to buy at a given price and future date.

As recent as Tuesday, there was scant activity in Heinz options. But by Wednesday, as the companies were putting the finishing touches on the deal, trading jumped to a recent record, data from Bloomberg shows.

The price of Heinz’s stock soared after the deal was announced. The stock finished up nearly 20 percent Thursday to close at $72.50, matching the offer price.

The S.E.C. is focusing on the sudden leap in options trading Wednesday, building on a related case it filed last year that also involved 3G, a company with Brazilian roots. In September, the agency obtained an emergency court order to freeze the assets of a Brazilian man suspected of insider trading around 3G Capital’s takeover of Burger King. The trader, a Brazilian citizen who worked at Wells Fargo in Miami, reportedly received the tip from a 3G investor.

3G has not been accused of any wrongdoi! ng in that case or in the Heinz inquiry. It is unclear who the S.E.C. is investigating this time.

While the inquiry is in its early stages, the person briefed on the matter said that regulators could take relatively prompt action. If it is concerned that traders might move the money overseas, the S.E.C. could ask a federal court to freeze the traders’ assets.

The S.E.C. routinely opens inquiries into trading activity after major mergers are announced, but often doesn’t bring charges. The agency, however, has renewed its focus on insider trading, mounting dozens of cases in recent years.

An S.E.C. spokesman declined to comment. Bloomberg News earlier reported that S.E.C. investigators were reviewing the surge in Heinz options trading.

After Strong I.P.O., Russia\'s Main Stock Exchange Begins Trading

MOSCOW â€" Russia’s main stock exchange has garnered enough investor interest for an initial public offering, another milestone in the country’s capitalist evolution.

The Moscow Exchange, better known by its original name, Micex, for the Moscow Interbank Currency Exchange, is scheduled to begin trading Friday in Moscow on its own trading platform.

The stock will price near the bottom of the expected range, valuing the company at slightly more than $4 billion, a financial industry official briefed on the plan said Thursday evening.

The listing drew interest from specialized investors in financial services companies and institutional investors in the United States and Europe, the official said. Micex has also benefited from the publicity of mergers and acquisitions in the stock exchange business worldwide, including the announced sale of the New York Stock Exchange.

The seesaw fortunes of the Russian companies that list on Micex have made it one of the world’s most volatile markets. From its inception in 1992 until the start of the 2008 recession, the Russian stock market had been in either the top five performing markets in the world or the bottom five in every year except one.

The company managing the exchange, though, has made an argument that it is a far safer bet than the companies it lists because it earns fees on both long and short trades and from foreign currency deals, its original niche.

The Russian central bank founded Micex as a market for trading rubles into foreign currency legally, something that had been tightly regulated in the past. That was the best thing that ever happened to early post-Soviet financiers, who knew which way that bet would go and made easy fortunes on Micex.

The exchange evolved to trade stocks when they appeared in ! Russia in the early 1990s and presided over the panic selling of state bonds in the 1998 default. By 2011, it was the dominant exchange after it merged with a rival, the Russian Trading System. The main product of the Russian Trading System was a dollar-denominated derivative of an index fund for the Russian market, used primarily to short the entire country’s economy, a position sometimes used as a hedge by nervous companies making other investments. Last year, this product accounted for 34 percent of all derivatives trades on Micex.

Other revenue streams are interest income from obligatory deposits that brokerage firms place with the exchange to trade, fees charged to issuing companies and data sales.

The central bank will remain the largest shareholder after the issue of 10 to 15 percent of the shares. The organizing banks are expected to announce the size of the float on Friday.

Mattias Westman, founder of Prosperity Capital Management, the largest foreign portfolio investor in Russi, which manages $4.5 billion in stocks and other assets, many of which are traded on Micex, said owning shares in the stock exchange was also a way to bet on the strengthening domestic financial system.

Micex’s offering, he said, “is a symptom of the whole market maturing,” 20 years after the end of the Soviet Union.

Bruce Bower, portfolio manager at Verno Capital, a Russia-focused fund, said the exchange’s mix of offerings for investors wanting either long or short positions, its interest earnings and fees for currency exchange made it a relatively safe stock as “the financial utility for Russia.”

Icahn Reveals His Stake in Herbalife

Carl C. Icahn officially has a dog in the Herbalife fight.

The billionaire investor has built up a 12.98 percent stake, or 14 million shares, in Herbalife, a nutritional supplements company that has been at the center of a public spat involving prominent Wall Street investors. Mr. Icahn paid about $214.1 million for shares and call options in the company, according to a filing on Thursday.

Mr. Icahn amassed his position recently, ramping up his purchases in late January and February after a heated debate on live television with another investor, William A. Ackman, who is betting against Herbalife.

The two investors, whose animosity against each other extends back a decade, engaged in an argument on CNBC on Jan. 25 that riveted Wall Street.

Mr. Icahn had indeed bought a stake in Hrbalife at that point, but he accelerated his purchases in the subsequent weeks.

Herbalife’s shares jumped as much as 20 percent in after-hours trading on Thursday. The stock rose 5 percent during the day to close at $38.27 a share.

Mr. Ackman, of Pershing Square Capital Management, announced his short-selling position in December, contending that Herbalife was a fraud. Since then, other big-name investors have taken sides. Daniel S. Loeb, who runs Third Point, said he was betting that Herbalife shares would rise.

Herbalife has defended itself against Mr. Ackman’s accusations, even as a battle has raged about its prospects. The company is “financially strong and successful,” Barbara Henderson, a spokeswoman for Herbalife, said in a recent statement, calling Mr. Ackman’s position “reckless.”

Much of Mr. Icahn’s stake consists of call options. He owns options for 8.3 million shares that expire on Jan. 28, 2015, in addition to options for 3.2 million shares that e! xpire on May 10 of this year.

At Senate Hearing, Warren Comes Out Swinging

Elizabeth Warren’s distaste for Wall Street defined her tenure as a regulator and her subsequent campaign for the Senate.

So it was no surprise when her inaugural appearance as a Senate Banking Committee member featured a scathing critique of financial risk taking.

At a hearing on Thursday examining the oversight of the Dodd-Frank Act, Ms. Warren grilled top banking regulators on their response to Wall Street wrongdoing. Ms. Warren, a Democrat from Massachusetts who helped create the Obama administration’s new consumer agency, pressed government officials to justify how they police big banks.

“If they can break the law and drag in billions in profits and then turn around and settle paying out of those profits, then they don’t hve much incentive to follow the law,” she declared, receiving a smattering of applause from the gallery. “The question I really want to ask is about how tough you are.”

What followed was the Congressional equivalent of a “Ferris Bueller” moment. “Anyone” she asked, receiving silence in reply.

Thomas Curry, who as comptroller of the currency oversees many of the nation’s largest banks, finally spoke up. “We do not have to bring people to trial,” he explained, “to achieve our supervisory goals.”

His remarks failed to placate Ms. Warren. She then unleashed her bull-doggedness on Elisse B. Walter, chairwoman of the Securities and Exchange Commission. Ms. Walter noted that her ag! ency pushed for “additional authority” to crackdown on Wall Street.

“We truly believe that we have a very vigorous enforcement program,” Ms. Walter said.

But Ms. Warren countered with this: “Can you identify the last time you took the Wall Street banks to trial” Ms. Walter promised to “get back to you with the specific information,” adding that “we do litigate.”

Despite the acerbic style, there’s reason to think Ms. Warren was actually holding back. As the leader of the Consumer Financial Protection Bureau, she often faced off with Republican critics of the agency, including one episode where she was accused of lying.

She alluded to the dust-ups in her remarks on Thursday.

“I’ve sat where you sat,” she said to the panl of regulators who testified. “It’s harder than it looks.”

Weighing Down Heinz With Debt

Warren E. Buffett deployed his avuncular charm on Thursday when talking about Berkshire Hathaway’s proposed acquisition of H.J. Heinz. The food company’s chief executive, William R. Johnson, said the deal was a natural next-step that wouldn’t lead to big upheavals any time soon.

But for all the reassurances, the deal will turn Heinz into a much riskier company. It will have to operate with a much larger amount of debt on its books, significantly reducing the margin of error for its new owners.

Berkshre will be one of those new owners, taking a 50 percent stake. The other half will belong to 3G Capital Management, a Brazilian-backed investment firm that has stakes in other food and beverage companies including Burger King.

Berkshire and 3G are taking Heinz private in a $23 billion cash deal, which means its shares will come off the stock market. The deal will mean Heinz will also be liable for the debt used to pay for the deal. After the deal, Heinz could have well over $10 billion of debt, compared to $5 billion now.

One of the effects of the deal is that Heinz’s credit rating will almost certainly be slashed into junk territory. Before the deal was announced, Moody’s Investors Service rated the company two notches above junk.

Defenders of debt-laden deals like this say that they can work ! with the right owners.

Mr. Buffett said on CNBC on Thursday that 3G would have operational responsibilities. He thinks highly of 3G, whose principal owner is a billionaire called Jorge Paulo Lemann. “I don’t think I’ve ever seen a better developed management group than the one Jorge Paulo Lemann has developed over the years in Brazil,” said Mr. Buffett. “He has been incredible.”

3G has a majority stake in Burger King, which it brought back onto the stock market last year after taking it private in 2010. It appears that 3G and Berkshire may want to use Heinz as a vehicle to make other acquisitions.

But that may turn into an uphill journey. Not only is there all the new debt to pay, Heinz is being bought at a high valuation, roughly 20 times its earnings. When companies are bought at a lofty multiple to earnings, it’s theoretically harder for the acquirers to achieve their investment return targets. To hit those targets, management may decide to cut costs, leading to job losses Or, conversely, the company spend a lot of money in new initiatives in an effort to increase revenue.

And there is an element to the deal that shows Mr. Buffett is well aware of its risks.

In addition to common equity, Berkshire is getting $8 billion of preferred shares. These will pay Berkshire a 9 percent return, according to a person familiar with the deal’s terms. That’s a hefty return from a company in a relatively stable industry. Berkshire got only slightly higher â€" 10 percent - on preferred shares in Goldman Sachs that it purchased at the height of the financial crisis.

More important, the preferred income gives Berkshire significant protection if the value of its common shares falls below expectations. “There aren’t many entities that could do this deal, Berkshire is making sure it’s getting paid for it,â! € said M! eyer Shields, an analyst who covers Berkshire Hathaway for Stifel Nicolaus.

One mystery is why Mr. Buffett didn’t just buy common stock of Heinz on the open market. Berkshire often does that, and currently holds sizable stakes in companies as diverse as I.B.M. and Coca-Cola.

Perhaps he wanted to own more than a small minority stake, but purchasing the whole of Heinz may have been too big a deal, even for Berkshire Hathaway. Indeed, one day, 3G may decide to sell its stake to Berkshire, giving it full ownership. And in the meantime Berkshire would have earned a solid return on its preferred shares and its common shares.

“ ‘Buy commodities, sell brands’ ha long been a formula for business success,” Mr. Buffett wrote in a recent annual report. Heinz certainly fits that mold today. The big question is whether it still will once its balance sheet has been loaded up with debt.

Heinz Gives Taste of New Buyout Sauce

Heinz ketchup is giving markets a taste of private equity’s new secret sauce.

Buyout firm 3G Capital is swallowing the condiment king for $28 billion with Warren E. Buffett’s help. In the past, such mega-L.B.O.s required multiple firms to work. With so-called club deals all but dead, the Heinz takeover shows the new way forward.

Only six weeks ago, the group of Brazilians behind both Anheuser-Busch Inbev and 3G, which owns Burger King, made the pitch to Heinz. The U.S. icon quickly saw the benefits of the more globally minded Jorge Paulo Lemann and his other fellow Gs, named for the Brazilian Banco Garantia they started together. While growth at Hein is usually as slow as its ketchup flows, the cash still pours out quickly. Moody’s expects the company to generate about $450 million of free cash flow for the year ending April 30.

Even so, 3G would have been hard-pressed to pull off anything of this scale alone. Lemann enlisted his old Gillette board pal Mr. Buffett with a transaction perfectly suited to his burger, shake and value-investing appetite. Berkshire Hathaway is putting in the same $4.5 billion of equity as 3G. The Oracle of Omaha’s conglomerate also could reap a 9 percent dividend from some $8 billion of preferred stock he’s acquiring in the deal.

The arrangement is similar to one being used by Michael S. Dell to buy his eponymous PC maker. Instead of assembling a roster of private equity firms, as was the norm in the pre-crisis buyout boom, Silver Lake Partners and Dell turned to Microsoft for additional funding. And Dell kicked in some cash from his MSD investment vehicle to go along with his 14 percent stake in the company.

Despite how cheap it is to borrow, more creative pairings probably will be needed if more big public companies are to go private. Buyout firms are understandably reluctant to band together after their invetors balked and regulators pried into clubby relationships. Berkshire Hathaway and Microsoft aren’t the only companies with hoards of cash they’d like to put to work. Teaming up with private equity might turn out to be a combination that works as well as ketchup on a Whopper.

Agnes T. Crane is a columnist for Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Heinz: A Bonanza for Independent Advisers

The sale of H.J. Heinz to Berkshire Hathaway and 3G Capital is big in many ways â€" the headline price of $23 billion, for one. But one notable fact is that most of the banks putting the deal together aren’t bulge-bracket firms.

Most of the work in putting the deal together was done by independent advisory shops, with Lazard as lead adviser to Berkshire and 3G and Centerview Partners as one of the main bankers to Heinz. Another, Moelis & Company, worked for a transaction committee of Heinz’s board.

While there were bigger banks involved in the deal as well, people briefed on the matter said that they played supporting roles in the transaction. Bank of America Merrill Lynch was Heinz’s other financial adviser, and JPMorgan Chase and Wells Fargo provided debt financing and some advice to Berkshire and 3G.

Indeed, the two perennial leaders in the race for top mergers adviser, Goldman Sachs and Morgan Stanley, are nowhere to be seen in the transaction.

Lazard, and in particular its global head of investment banking, Antonio Weiss, has long been an adviser to 3G, having helped arrange deals like the investment firm’s purchase of Burger King. Mr. Weiss has also been the longtime banker to InBev, the product of deals engineered by 3G backer Jorge Paulo Lemann that culminated in the 2008 merger of the Brazilian-Belgian brewer and Anheuser Busch.

(Earlier on Thursday, Anheuser-Busch InBev announced a significant revision of its deal to by Grupo Modelo of Mexico, in an effort to head off a battle with the Justice Department on antitrust grounds.)

Centerview Partners has been especially busy over the past several months, having advised on transactions like Clearwire‘s proposed sale to Sprint Nextel and Alliance Boots’ $6.7 billion deal with Walgreens.

And Moelis & Company was an adviser to NYSE Euronext in it! s planned! sale to the IntercontinentalExchange, as well as to the creditors committee of American Airlines as part of the company’s merger with US Airways.

Independent investment banks have long boasted that their business model â€" providing only advice, without trying to sell clients a plethora of other products â€" has its benefits, including fewer conflicts of interest.

That isn’t to say that full-service banks have been struggling of late. For example, JPMorgan has had leading roles in the other deals worth ver $15 billion announced over the past two weeks, including the takeover bids for Dell and Virgin Media, as well as the sale of General Electric‘s remaining interests in NBC Universal.

Heinz: A Bonanza for Independent Advisers

The sale of H.J. Heinz to Berkshire Hathaway and 3G Capital is big in many ways â€" the headline price of $23 billion, for one. But one notable fact is that most of the banks putting the deal together aren’t bulge-bracket firms.

Most of the work in putting the deal together was done by independent advisory shops, with Lazard as lead adviser to Berkshire and 3G and Centerview Partners as one of the main bankers to Heinz. Another, Moelis & Company, worked for a transaction committee of Heinz’s board.

While there were bigger banks involved in the deal as well, people briefed on the matter said that they played supporting roles in the transaction. Bank of America Merrill Lynch was Heinz’s other financial adviser, and JPMorgan Chase and Wells Fargo provided debt financing and some advice to Berkshire and 3G.

Indeed, the two perennial leaders in the race for top mergers adviser, Goldman Sachs and Morgan Stanley, are nowhere to be seen in the transaction.

Lazard, and in particular its global head of investment banking, Antonio Weiss, has long been an adviser to 3G, having helped arrange deals like the investment firm’s purchase of Burger King. Mr. Weiss has also been the longtime banker to InBev, the product of deals engineered by 3G backer Jorge Paulo Lemann that culminated in the 2008 merger of the Brazilian-Belgian brewer and Anheuser Busch.

(Earlier on Thursday, Anheuser-Busch InBev announced a significant revision of its deal to by Grupo Modelo of Mexico, in an effort to head off a battle with the Justice Department on antitrust grounds.)

Centerview Partners has been especially busy over the past several months, having advised on transactions like Clearwire‘s proposed sale to Sprint Nextel and Alliance Boots’ $6.7 billion deal with Walgreens.

And Moelis & Company was an adviser to NYSE Euronext in it! s planned! sale to the IntercontinentalExchange, as well as to the creditors committee of American Airlines as part of the company’s merger with US Airways.

Independent investment banks have long boasted that their business model â€" providing only advice, without trying to sell clients a plethora of other products â€" has its benefits, including fewer conflicts of interest.

That isn’t to say that full-service banks have been struggling of late. For example, JPMorgan has had leading roles in the other deals worth ver $15 billion announced over the past two weeks, including the takeover bids for Dell and Virgin Media, as well as the sale of General Electric‘s remaining interests in NBC Universal.

Graphic: The 10 Biggest Food Deals

The food industry has long been a fertile area for deal activity. Companies that can offer well-known brands and strong steady cash flows are attractive to both strategic buyers and private equity firms. Food, along with tobacco, was at the heart of one of the fiercest corporate takeover battles â€" the fight for RJR Nabisco, as famously chronicled in “Barbarians at the Gate.”

The acquisition announced on Thursday by Warren E. Buffett and 3G Capital Management ranks No. 4 among food deals, at $27.28 billion figure, which includes debt but is net of cash, according to Thomson Reuters data. The spinoff of Kraft Foods from Altria in 2007 ranks as the largest food deal.

Here are the biggest, according to Thomson Reuters:

10 Biggest Food Deals

DEAL, IN BILLIONSTARGETBUYERANNOUNCED

Source: Thomson Reuters * Deal is pending.
$61.5	Kraft Foods	Shareholders	January 2007
60.4	Anheuser-Busch	InBev NV	June 2008
36.0	Kraft Foods-North American Grocery	Shareholders	September 2012
27.2	HJ Heinz	Berkshire Hathaway and 3G Capital Partners	February 2013*
23.6	Bestfoods	Unilever	May 2000
23.1	William Wrigley Jr.	Mars	April 2008
20.8	Cadbury	Kraft Foods	September 2009
20.0	Grupo Modelo SAB de CV	Anheuser-Busch Inbev	May 2012*
19.3	Nabisco Holdings	Philip Morris	May 2000
18.6	Scottish & Newca! stle	L’Arche Green NV	October 2007

Former Co-Chief of BlackBerry Sells Off His Shares

Jim Balsillie, the former co-chief executive and co-chairman of BlackBerry, has sold all of his shares in the struggling company, a regulatory filing indicated on Thursday.

Mr. Balsillie’s arrival at what was then called Research in Motion in 1992 and his personal investment of $125,000 saved the company in its early days. But Mr. Balsillie’s latest investment move means that he will not gain if the new line of BlackBerry 10 phones revive the company’s fortunes.

A filing with the Securities and Exchange Commission, dated Thursday, showed that Mr. Balsillie held no shares in the company as of the end of December. Mr. Balsillie owned up to 33 percent of the company, now called BlackBerry, before it became publicly traded and he reported holding 5.1 percent of its shares in a previous filing.

When asked about Mr. Basillie’s pullout, Kris Thompson, a longtime BlackBerry analyst at National Bank Financial, replied: “Who cares” BlackBerry’s shares initially slipped 7.5 percent to $12.94 in Nasdaq trading Thursday, but had recovered later in the morning.

Following a protracted and severe decline in BlackBerry’s stock price and American market share, Mr. Balsillie stepped down as both co-chief executive and co-chairman along with Mike Lazaridis in January 2012. While Mr. Lazaridis remains on the BlackBerry board as the company’s vice chairman, Mr. Balsillie resigned as a director in March.

A separate securities filing issued on Thursday indicated that Mr. Lazaridis, who co-founded the company, still holds 5.7 percent of BlackBerry’s stock.

Mr. Balsillie could not immediately be reached for comment. Adam Emery, a spokesman for BlackBerry, said the company does not “comment on holdings of ind! ividual shareholders.”

Earlier this week Mr. Thompson, the analyst, issued a report that praised many of the features on the new BlackBerry 10 phones but concluded that they will not significantly rebuild the company’s market share. He cited an impending wave of new products from larger competitors and the general lack of desirable and high quality apps for BlackBerry 10.

While Mr. Lazaridis handled the technology side of the company, Mr. Balsillie, an accountant, is widely credited with putting BlackBerry on the stable financial footing that ultimately allowed it to develop the BlackBerry device. He also played a pivotal role in convincing skeptical wireless carriers to carry the company’s first wireless e-mail devices on their networks.

Both men, however, were widely criticized for not responding more effectively and swiftly to the arrival of Apple’s iPhone and phones using Google’s Android operating system. Those smartphones now overwhelmingly dominate a market that Blackerry created and was once leading.

At various times, Mr. Balsillie and Mr. Lazaridis have sold substantial stakes in BlackBerry to fund educational institutions in Waterloo, Ontario, the company’s hometown.

Cardinal Health Buys Medical Supplier for $2 Billion

Cardinal Health, the second-largest distributor of prescription drugs, announced Thursday that it was buying a large medical supplier in a $2 billion deal aimed at expanding the business into the growing home health-care area.

The medical supplier, the privately held AssuraMed, supplies products to aid with diabetes treatment, wound care, incontinence and other conditions for use in the home and had annual sales in 2012 of $1 billion, Cardinal Health said.

AssuraMed, which has been owned by the private equity firms Clayton, Dubilier & Rice and Goldman Sachs‘ GS Capital Partners, serves more than 1 million patients nationwide and sells more than 30,000 products.

In an interview, Cardinal’s chief executive said the acquisition is aimed at taking advantage of a confluence of national trends: the aging population, which has led to an increase in patients with chronic conditions, and a trend toward treating more of those conditions at home or in non-hospital settings like doctor’s offices and outpatient clinics.

“One of the things that has become clear is we’re going to have to manage patients differently,” said George Barrett, Cardinal’s chairman and chief executive, said. “It very strategically aligns with where we think healthcare is moving, and it’s a natural extension of our skill set.”

In a conference call with investors, Mr. Barrett said the home health care area was growing at nearly 7 percent and represented a market opportunity of about $16 billion.

The deal is expected to! close in April and will be financed with a combination of $1.3 billion in senior unsecured notes and cash. Cardinal estimated the acquisition would add 2 to 3 cents to its earnings per share in 2013, and 18 cents per share by 2014.

Cardinal, based in Dublin, Ohio, had revenue of $108 billion in 2012 and ranks second in the drug-distribution market behind McKesson, based in San Francisco.

Cardinal was up about 1.75 percent in mid-morning trading, to $46.24.

Cardinal was advised by Bank of America Merrill Lynch and the law firm Wachtell Lipton Rosen & Katz. Clayton Dubilier and GS Capital were advised by JPMorgan Chase, Goldman Sachs and the law firm Debevoise & Plimpton.

TimesCast: Creating the Nation\'s Largest Airline

Ending a yearlong courtship by US Airways, American Airlines agreed to merge with the smaller carrier, paving the way for the creation of the nation’s largest airline.

John Kerry Potential Winner in Heinz Deal

The $23 billion takeover of H.J. Heinz on Thursday featured a familiar cast of characters save for one unlikely victor: Secretary of State John Kerry.

Mr. Kerry â€" married to Teresa Heinz Kerry, an heir to the Heinz ketchup fortune â€" held $3 million worth of shares in the company last year, according to an analysis of disclosure forms by the Center for Responsive Politics. Unless he since sold off the stake, Mr. Kerry will likely reaped hundreds of thousands of dollars. Berkshire Hathaway and 3G Capital have agreed to pay $72.50 a share for Heinz, roughly 20 percent above the closing price on Wednesday

Ms. Heinz Kerry also has significant stakes in the condiment maker. She inherited the fortune from her husband H. John Heinz III, a Republican senator who died in a 1991 plane crash.

When Mr. Kerry, a Democratic senator for more than two decades, took over the State Department this month, he vowed to she some private investments. So did Ms. Heinz Kerry.

But the divestitures, coming within 90 days of him taking office, are largely unrelated to Heinz. Mr. Kerry will forfeit his stake in Apple, Goldman Sachs and other corporate giants, but a recent ethics form made no mention of his Heinz shares.

As for Ms. Heinz Kerry, she remains a beneficiary of various family trusts, in which the largest investment is Heinz stock. She did agree to forgo her investment in the Heinz Family Group, an unrelated private firm.

The reluctance to part ways with Heinz shares could have something to do with their recent performance. Since filing his last Congressional disclosure in August, when he owned a $3 million piece of the company, the shares skyrocketed some 30 percent. On Thursday, after the deal was announced, shares jumped nearly 20 percent, to over $72.

It is unclear whether Mr. Kerry sold any part of t! he stake since the August disclosure. The State Department did not immediately return a request for comment.

Mr. Kerry will recuse himself from “certain matters involving” the company. He would do so, the form said, “as a matter of prudence.”

But the policy has loopholes. He can weigh in on Heinz with the blessing of ethics officials.

(No word on how the Secretary of State might encounter the condiment maker in the course of his work.)

With Heinz Deal, an \'Elephant\' for Berkshire

When Berkshire Hathaway agreed to buy the H.J. Heinz Company on Thursday, the deal had some of the classic hallmarks of Warren E. Buffett.

For one, the billionaire investor is adding another old-time American brand to his portfolio, which includes Dairy Queen and Fruit of the Loom.

But the $23 billion deal, in which he is teaming up with 3G Capital Management, is also notable for its size. In 2011, Mr. Buffett said he was on the hunt for bigger acquisition prey. With the Heinz deal, he has bagged his “elephant.”

Below is a look at some of Berkshire’s deals in recent years.

November 2012: Oriental Trading for $500 million | Mr. Buffett’s deals have recently been on the relatively small side, including te $500 million purchase of the Oriental Trading Company. The deal ended a series of ownership changes for the catalog-based seller of arts and crafts.

August 2011: Bank of America investment of $5 billion | With many investors feeling skittish about big banks, Berkshire announced plans to invest $5 billion in Bank of America, a vote of confidence in the company, which was struggling under the weight of its mortgage problems. Bank of America’s shares have rebounded strongly since then, as the bank has tried to put its legal woes behind it.

March 2011: Lubrizol for $9 billion | After telling sharehold! ers that Berkshire had reloaded its “elephant gun,” Mr. Buffett agreed to buy the Lubrizol Corporation, a chemical maker specializing in lubricants, for $9 billion in cash. The deal was touched by controversy after the revelation that David L. Sokol, who was then a top deputy to Mr. Buffett, purchased a stake in Lubrizol while orchestrating a potential takeover. The Securities and Exchange Commission ultimately decided not to file insider trading charges against Mr. Sokol.

November 2009: Burlington Northern Santa Fe for $26 billion | Berkshire General Electric investment of $3 billion | Mr. Buffett bought into General Electric at a steep discount, paying $3 billion for perpetual preferred stock. The company agreed to repay the investment in September 2011.

September 2008: Goldman Sachs investment of $5 billion | In the depths of the financial crisis, Berkshire agreed to invest $5 billion in Goldman Sachs. With the Berkshire backing, the investment bank also raised $5 billion in a stock offering. Goldman agreed to repay the investment in March 2011, leaving Berkshire with a $1.7 billion profit.

April 2008: Wrigley financing of $4.4 billion | As part of a $23 billion deal by Mars to buy the chewing-gum company Wrigley, Berkshire provided $4.4 billionof loans. “Those of you who know me, know that I have been a big fan of Wrigley’s business model for many years, and I love their products,” Mr. Buffett said at the time.

December 2007: Marmon Holdings stake for $4.5 billion | On Christmas Day, Mr. Buffett agreed to buy a 60 percent stake in Marmon Holdings from the Pritzker family for $4.5 billion, with plans to gradually increase his stake over the ensuing years.

The Brazilians Behind the Heinz Deal

Warren E. Buffett‘s $28 billion acquisition of Heinz â€" a quintessentially American company â€" is almost a caricature of a Buffett acquistion.

But Mr. Buffett’s partner in the deal, the Brazilian-backed investment firm 3G Capital, has also shown a hankering for iconic American businesses.

3G, whose principal owner is the Brazilian billionaire Jorge Paulo Lemann, add ketchup to a portfolio that has included burgers and beer. Mr. Lemann, who earned his fortune as a financier, played a major role in the multi-billion dollar merger of the Brazilian-Belgian beer giant InBev with Anheuser-Busch. He and his partners serve on Anheuser-Busch InBev‘s board.

And in 2010, 3G took Burger King Holdings private in a leveraged buyout valued at about $3.3 billion. Last April, just 18 months after taking it private, 3G sold shares of Burger King back to the public, but still retains majority ownership of the company. The firm has also previously invested in Wendy’s.

The ascendance of 3G and Mr. Lemann as major players on the global mergers-and-acquisition stage reflects the rise of Brazil as an economic power. Armed with strong balance sheets and a growing domestic economy, Brazilian companies have emerged as prominent buyers of American companies. In 2009, for instance, the Brazilian beef company JBS paid $800 million for a majority stake in Pilgrim’s Pride, the Texas chicken company.

Mr. Lemann, 73, who is worth $12 billion, according to Forbes magazine, is said to have come up with the idea to buy Heinz and brought it to his friend Mr. Buffett. The two men have known each other for decades, having served together on the board of Gillette! . Berkshire Hathaway is also a large shareholder of Anheuser-Busch InBev. Mr. Lemann, whose Swiss father emigrated to Brazil a century ago, is former Brazilian tennis champion who played at Wimbledon. He has lived in Switzerland since 1999, after an attempted kidnapping of his children.

He has been a major player in Brazil since the 1970s, when he acquired a small financial firm and build it into Banco de Investimentos Garantia, one of Brazil’s largest investment banks. Credit Suisse acquired his company for about $675 million in 1998. He and his business partners also earned a fortune after gaining control of a Brazilian brewery and building it into AmBev, one of the world’s largestbeer companies.

The point person on the transaction for 3G, which houses its investment operations in New York, is Alexandre Behring. Known as Alex, Mr. Behring is a Brazilian native who graduated from Harvard Business School in 1995 and lives in Greenwich, Conn. Another tidbit about 3G: For several years, it employed Marc Mezvinsky, the husband of Chelsea Clinton. Mr. Mezvinsky left 3G in 2011 and has since set up is own hedge fund.

Berkshire and 3G Capital to Buy Heinz for $23 Billion

Warren E. Buffett has found another American icon worth buying: H. J. Heinz.

Berkshire Hathaway, the giant conglomerate that Mr. Buffett runs, said on Thursday that it would buy the food giant for about $23 billion, adding Heinz ketchup to his stable of prominent brands.

Mr. Buffett is teaming up with 3G Capital, a Brazilian investment firm that owns a majority stake in a company whose business is complementary to Heinz’s: Burger King.

Under the terms of the deal, Berkshire and 3G will pay $72.50 ashare, a roughly 20 percent premium to Heinz’s closing price on Wednesday. Including debt, the transaction is valued at $28 billion.

The food company’s headquarters will remain in Pittsburgh, Heinz’s home for over 120 years.

Heinz was advised by Centerview Partners, Bank of America Merrill Lynch and the law firm Davis Polk & Wardwell. A transaction committee of the company’s board was advised by Moelis & Company and Wachtell, Lipton, Rosen & Katz.

Berkshire and 3G were advised by Lazard, JPMorgan Chase and Wells Fargo. Kirkland & Ellis provided legal advice to 3G, while Berkshire relied on its usual law firm, Munger, Tolles & Olson.

2 Airlines Announce Merger

American Airlines and US Airways announced on Thursday that they planned to merge in an $11 billion deal. Under the terms of the deal, US Airways shareholders would own 28 percent of the combined airline, with the remainder held by stakeholders, creditors, labor unions and employees of AMR, the parent company of American. The merger would create the nation’s biggest airline, in position to compete against United Airlines and Delta Air Lines, which have grown through mergers of their own.

On Wednesday, the boards of the companies met separately to approve the deal, Jad Mouawad reports in The New York Times. “The deal, which was completed in recent days, could be formalized as American leaves bankruptcy. W. Douglas Parker, the chairman and chief eecutive of US Airways, will take over as American’s chief executive. Thomas W. Horton, American’s current chairman and chief executive, will be chairman, though his tenure could be limited.”

“The merger still needs to pass several steps. It must be approved by American’s bankruptcy judge in New York. US Airways shareholders will also have to approve the deal. In addition, it will be reviewed by the Justice Department’s antitrust division, though analysts expect regulators to clear the deal. If approved, the nation’s top four airlines â€" American, United, Delta and Southwest Airlines â€" would control nearly 70 percent of the domestic market.”

TIME WARNER CONSIDERS SPINNING OFF MAGAZINES  |  Time Warner is in early talks with the Meredith Corporation to shed much of Time Inc., a move that would put most of its magazines into a new joint venture, Amy Chozick and Michael J. de la Merced report in The New York Times. “The new company would then borrow money to pay a one-time dividend back to Time Warner, essentially turning what appears to be a corporate spinoff into a sale. The figure being discussed is $1.75 billion, according to the people involved in the negotiations, who requested anonymity to discuss private conversations publicly.”

The possible deal is among several options Time Warner is considering to reduce its troubled publishing division, which was the foundation of the $49 billion media conglomerate. As part of the current proposal, Time Warner shareholders would likely receive about two-thirds of the new company and Meredith shareholders the remainder, DealBook writes. The transaction would be the most significant eal in Meredith’s roughly 111-year history.

The joint venture would be primarily a women’s magazine company, including Time Inc. magazines like People, InStyle and Real Simple, and Meredith titles like Better Homes and Gardens and Ladies’ Home Journal. Time Warner would continue to control Time, Fortune, Sports Illustrated and Money magazine.

SAC CAPITAL MANAGER AWAITS WORD ON CHARGES  |  Federal prosecutors are closer to deciding whether to bring charges against Michael Steinberg, a longtime portfolio manager at SAC Capital Advisors, who would be the most senior employee charged in the government’s investigation of the hedge fund owned by Steven A. Cohen. DealBook’s Peter Lattman reports: “In recent months, a former SAC analyst who worked directly for Mr. Steinberg has met with authoritie! s and prov! ided them with information about his former boss, according to a person with direct knowledge of the investigation. The analyst, Jon Horvath, has been cooperating with the government since pleading guilty in September to insider trading charges.”

Investors in SAC have until Thursday to tell the $14 billion hedge fund that they want their money back. The intensifying investigation into suspicious trading has put pressure on SAC, which has told employees it expects at least $1 billion in withdrawals.

The former SAC analyst, Mr. Horvath, “told federal criminal investigators that he was pressured by his manager to gather inside information on technology stocks, according to people familiar with the briefing,” The Wall Street Journal reports. Mr. Steinberg, who was put on leave from SAC last year, “did absolutely nothing wrong,” his lawyer said in statement.

REVISED TERMS IN BEER DEAL  |  In an effort to persuade American antitrust authorities to let the deal go ahead, Anheuser-Busch InBev on Thursday revised its $20.1 billion bid for Grupo Modelo, the Mexican maker of Corona beer. DealBook’s Mark Scott reports: “Under the revised terms, the company offered to sell the rights to Corona and other Grupo Modelo brands in the United States to Constellation Brands, the world’s largest wine company, for $2.9 billion. A brewery close to the United States-Mexico border currently owned by Grupo Modelo would be sold to Constellation, as well as the perpetual licensing rights to Grupo Modelo’s brands in the United States.”

ON THE AGENDA  |  The Senate Banking ! Committee! holds a hearing titled “Wall Street Reform: Oversight of Financial Stability and Consumer and Investor Protections” at 10:30 a.m. Elisse B. Walter, chairwoman of the Securities and Exchange Commission, and Gary Gensler, chairman of the Commodity Futures Trading Commission, are among the regulators scheduled to testify. General Motors and Vulcan Materials report earnings before the market opens. Banana Joe, the affenpinscher who was named Best in Show at the Westminster Kennel Club dog show, appears on CNBC at 9:40 a.m.

BEST BUY FOUNDER SAID TO CONSIDER PLAN B  |  Richard Schulze, the founder of Best Buy, is not having the easiest time lining up financing for a bid to take the big retailer privat.. So he is “weighing whether to scrap” the plan and “instead line up investors to take a minority stake in the company,” The Wall Street Journal reported, citing unidentified people familiar with the matter. Best Buy’s stock fell on the news, to close the day down 2 percent. Mr. Schulze “hasn’t yet gotten enough support from banks to finance the deal,” the newspaper added. Still, there is an important caveat: “Any decision is still in the early stages, and Mr. Schulze could still go ahead with his initial strategy.” He has until the end of this month to make a bid.

Mergers & Acquisitions Â'

In First Disclosure, Getco Reports Years ! of Saggin! g Profit  |  Getco, the privately held high-frequency trading firm, released its financial results for the first time as part of its impending purchase of Knight Capital Group. DealBook Â'

General Electric to Return Cash to Shareholders  |  Reuters reports: “General Electric Co. expects to return about $18 billion to investors this year in share buybacks and dividends as it sells its remaining stake in NBCUniversal.” REUTERS

Standard Life Said to Be in Talks to Buy Unit of Newton Investment Management  |  Standar Life of Britain is in “exclusive discussions” to buy the wealth management division of Newton Investment Management for up to roughly $140 million, according to The Telegraph. TELEGRAPH

An Expensive but Logical Cable Deal  |  The revelation that Vodafone of Britain is looking at Germany’s biggest cable operator has understandably unnerved its shareholders, Quentin Webb of Reuters Breakingviews writes. DealBook Â'

Rio Tinto Reports Loss for 2012  | 
WALL STREET JOURNAL

INVESTMENT BANKING Â'

BNP Paribas Earnings Fall on Write-Downs  |  France’s largest bank, BNP Paribas, reported a 33 percent decline in fourth-quarter profit, to $688 million, as it wrote down the value of its Italian unit and booked an accounting charge on its own debt. DealBook Â'

Meet the Morgan Stanley C.F.O. Candidates  |  Among the leading internal candidates are said to be Paul Wirth, Jonathan Pruzan, Dan Simkowitz and James A. Rosenthal. DealBook Â'

Bank of America’s Continuing Legal Troubles  |  The Wall Street Journal’s Heard on the Street column writes: “Bank of America’s stock is on a tear, but one trend hasn’t been its friend: legal decisions in disputes over mortgages guaranteed by bond insurers or sold to investors.” WALL STREET JOURNAL

PRIVATE EQUITY Â'

Asahi Sues 2 Private Equity Firms Over $1.3 Billion Deal  |  Asahi has accused two Asia-Pacific buyout firms of falsifying financial data when they sold New Zeal! and’s I! ndependent Liquor to the Japanese brewer in 2011. DealBook Â'

Rubenstein of Carlyle Likens Congress to Panda Bears  | 
WALL STREET JOURNAL

HEDGE FUNDS Â'

Hedge Funds Said to Profit on Bets Against the Yen  |  The Wall Street Journal reports: “George Soros, who made a fortune shorting the British pound in the 1990s, has scored gains of almost $1 billion on the trade since November, according to people ith knowledge of the firm’s positions. Others reaping big trading profits by riding the yen down include David Einhorn’s Greenlight Capital, Daniel Loeb’s Third Point LLC and Kyle Bass’s Hayman Capital Management LP, investors say.” WALL STREET JOURNAL

Omega Advisors Sold Apple Stake in 4th Quarter  | 
REUTERS

Investors Said to Pull $1 Billion From Winton Capital  | 
REUTERS

I.P.O./OFFERINGS Â'

London Exchange Eases Rules for Fast-Growing Companies  |  The Wall Street Journal reports: “The London Stock Exchange is launching a new niche market targeting high-growth companies and allowing them to float.” WALL STREET JOURNAL

Real Estate Trust Rises in Japan Debut  |  A real estate investment trust run by Prologis, an owner of industrial buildings based in San Francisco, jumped 24 percent in trading in Tokyo after raising about $1 billion, Bloomberg News reports. BLOOMBERG NEWS

VENTURE CAPITAL Â'

Online Lender Attracts $42 Million  |  On Deck Capital, which offers loans to small businesses online, raised a round of financing led by Institutional Venture Partners. TECHCRUNCH

Partner at Google Ventures Discusses V.C. Market  | 
WALL STREET JOURNAL

LEGAL/REGULATORY Â'

Repercussions of an Italian Bank Scandal  |  The emergence of a scandal at Monte dei Paschi di Siena “raises persistent questions about transparency in Italian business and why Italy’s third-largest bank by assets was allowed to rack up risk for so long so that it became a systemic threat in the heat of the sovereign crisis,” The Financial Times writes. FINANCIAL TIMES

Regulator Explains Decision to End Flawed Foreclosure Review  |  Thomas J. Curry, the comptroller of the currenc, shed light on the recent decision to scuttle an independent review of bank foreclosures, portraying the flawed process as a boon to outside consultants and a barren maze for homeowners. DealBook Â'

Nominee for Treasury Secretary Fields Questions From Senators  |  The New York Times reports: “Jacob J. Lew, President Obama’s nominee for Treasury secretary, faced some fierce questioning on Wednesday from the Senate Finance Committee on his tenure at the bailed-out Citigroup and on an investment based in the Cayman Islands. But the even-tempered, bookish Mr. Lew parried the blows and appeared likely to win the committee’s approval and Senate confirmation.” NEW YORK TIMES

Keeping the Libor Process Intact  |  “Several banks planned to withdraw from the panel that sets a key benchmark interest rate but scrapped the idea after the U.K.’s financial regulator strongly warned them against doing so, according to people familiar with the matter,” The Wall Street Journal reports. WALL STREET JOURNAL

Madoff Trustee Looks to Distribute $505 Million to Victims  | 
WALL STREET JOURNAL