Jorge Lemann is behind some of America’s most iconic consumer brands.
The Brazilian billionaire’s investment company, 3G Capital, has invested in or backed takeovers of Kraft, Heinz, Burger King, Tim Hortons, Anheuser Busch and SAB Miller.
Now, Kraft Heinz – which counts Lemann and Warren Buffett among its top shareholders – is pushing for a deal for Unilever.
Unilever has rejected the approach, but Kraft said in a statement that is is looking “forward to working to reach agreement on the terms of a transaction.” Unilever said in a statement is does not see a basis for any further discussions.
A deal would put a huge chunk of the world’s best known brands in the hands of one company.
Combinations of large consumer companies are Lemann’s signature: 3G created the world’s fifth-largest food company by investing $10 billion into a merger of Kraft and Heinz, and engineered a fast-food giant after buying Burger King in 2010 for $3.3 billion and putting it together with Tim Hortons for another $11.3 billion.
“I think above all you must always be building something,” he says in this video interview with Falconi Consultants posted on YouTube. “We always want to arrive somewhere, to improve, and we are always trying to get there by making things better around us … these are the things that guide me.”
The Harvard graduate has gone from journalist to national tennis champion to banker and now billionaire investor with a net worth of over $29 billion, according to Forbes. Here’s his story:
This is an updated version of an article published earlier this month about Jorge Lemann.
Lemann was born in Rio de Janeiro in 1939. His father was a Swiss businessman who immigrated to Brazil in the 1920s. His family had been Swiss cheese merchants for over 300 years.
His mother was from a family of cocoa merchants in Bahia, who were more ambitious, Lemann said during the interview with Falconi. That was where he got his drive.
At 17, he left Brazil to attend Harvard, earning his bachelor’s degree in economics in 1961. At first, he didn’t like it there and didn’t do well — he loved the beaches of Brazil. But his mother stopped him from leaving Harvard to become a surfer or a tennis player.
Now he has a great relationship with Harvard, setting up scholarships for Brazilian students.
Harvard even recommended that he take a yearlong break from school because he wasn’t mature enough. Instead, Lemann finished school in three years by interviewing students, professors, and looking at old tests before choosing a class. He was 20 when he graduated.
Though he now regrets not taking more advantage of the faculty at Harvard, for example speaking with Henry Kissinger or Paul Samuelson, according to a speech Lemann made to his foundation, Estudar, translated by Forbes.
After Harvard, Lemann worked as a journalist at Brazil’s third-oldest paper, Jornal do Brasil, though apparently he wasn’t great at journalism. He then trained at Credit Suisse in Switzerland.
“If he had continued being a journalist, he was going to be a Joe Schmo,” said Alberto Dines, 78, the former managing editor of the Rio de Janeiro-based newspaper, to Bloomberg.
Lemann was Brazil’s national tennis champion five times. He represented Brazil and Switzerland (he has dual citizenship) in the Davis Cup. He also made it to Wimbledon.
Carl Icahn would later ask Lemann to play a game, to which Lemann smiled and replied, “perhaps.”
After learning from Alex Behring that Lemann used to play professionally, Ichan said, “Forget the betting!”
In 1971, 32-year-old Lemann bought an insignificant brokerage called Banco de Investimentos Garantía SA for $800,000. By the 1980s, it was the place young people wanted to work.
Lemann wanted to turn it into Brazil’s Goldman Sachs by adopting the American firm’s partnership model. But the interview process was unusual. Partners would look for people who were poor, smart, with a deep desire to get rich. And they would ask odd or offensive questions – one interviewee was asked if he had sex with his girlfriend, Bloomberg reported.
He met his current partners, Carlos Alberto Sicupira and Marcel Herrmann Telles, also at that brokerage firm. (They are also now billionaires, by the way.)
The trio, known as the “Three Musketeers” would go on to buy Lojas Americanas SA, a now huge chain of retail stores in Brazil, in 1982 for $24 million. It was Brazil’s first hostile takeover.
In 1989, Lemann and company acquired the beer company Cia Cervejaria Brahma for $50 million, foreshadowing things to come.
“Brahma became the perfect laboratory for their business model, based in meritocracy and obsessive cost-control, among other things,” said Cristiane Correa, who wrote a book about 3G called “Dream Big” to The New York Times. “With time they acquired other breweries and just replicated the model.”
Each year, Brahma’s management was required to start their budget from zero – and had to make a case why they needed more. This model has also been copied at Burger King, according to Bloomberg.
This focus on cash flows also explains why it wasn’t a problem for Lemann to pay down the debt after the takeover of Anheuser-Busch in 2008.
Check out a commercial Megan Fox made for Brahma below:
In 1993, he and his partners created the buyout firm GP Investimentos and started buying and selling companies. Along the way, he built Garantía into a powerhouse, eventually selling it for $675 million in 1998 to Credit Suisse First Boston after a huge loss from the 1997 Asian financial crisis.
He grew the bank for years until more than $100 million in trading losses pushed him to sell.
But then Lemann really blew up. He was nominated to the board of Gillette, where he met Warren Buffett.
Lemann is super private about his personal life, but we do know he moved to Switzerland in 1999 because there was an attempt to kidnap his three children in Rio — 20 shots were fired.
According to The Wall Street Journal, this helped spur Brazil’s armored-car industry.
That same year, the “Three Musketeers” created AmBev from Brahma and another Brazilian beer maker, Antarctica, for the purpose of international expansion.
All the while, GP Investimentos was growing into what would be the biggest listed private equity firm in Latin America.
AmBev is now in control of 80% of Paraguay’s and 55% of Uruguay’s beer market. The company also announced plans to build a $38 million brewery in Peru. In 2014, the company also bought back South Korea’s Oriental Brewing Co. for $5.8 billion — which meant they also got 60% of that market.
According to Reuters.
They also control 15.6% of China’s beer market – having bought Fujian Sedrin Brewery in 2006.
In later years, it would acquire Argentina’s top selling beer, Quilmes, for $600 million, dominating 70% of Argentina’s market.
In 2004, AmBev merged with the Belgian brewer InterBrew for $11 billion, and became known as InBev. Lemann and his partners founded a New York City-based firm, 3G Capital, in the same year.
In 2008, the beer conglomerate merged with American brewer Anheuser Busch for $52 billion — becoming Anheuser-Busch InBev.
In 2010, they bought Burger King for $3.3 billion.
Sidenote: You can thank Lemann for getting rid of that creepy Burger King king: He fired the ad firm that came up with it.
The Burger King deal was a huge success. In two years they sold 29% of the company to hedge fund manager Bill Ackman’s UK investment vehicle, Justice Holdings.
And Lemann kept on going. In 2012, he bought up the makers of Corona, Grupo Modelo, for $20 billion. That was only possible after an antitrust settlement in the US.
It set the stage for Lemann’s 2013 deal with Warren Buffett — buying Heinz. The $28 billion deal came together in six weeks.
And then, in 2014, Burger King struck a deal with Tim Hortons, with the combined company becoming Restaurant Brands International.
But the talk of the street had been AB InBev potentially acquiring SABMiller, the world’s second-largest brewer by revenue.
SABMiller had also been expanding in the time AB InBev became a giant – in 2011, it bought Australia’s largest brewer, Fosters Group, for $13 billion. In 2014, it tried and failed to buy out Heineken.
The merger puts the combined SABMiller and AB InBev in control of more than half of the world’s beer market by profit.
The red areas show countries where AB InBev dominates; orange-colored areas are where the two brewing giants share the market, and yellow represents areas of SABMiller dominance. The post-merger company will produce one-third of the world’s beer.
Now Kraft Heinz is going after Unilever.
Unilever has a market capitalisation of around £112 billion ($139 billion), while Kraft Heinz is worth around £85 billion ($106 billion) at the most recent estimate. That puts the value of a combined company at close to $250 billion.
A Unilever statement said that the offer represented an 18% premium on the company’s value, but seemed to pour water on any chance that a merger of the two companies is likely.
But don’t be surprised if Kraft Heinz returns to the table with an improved offer. Morgan Stanley analysts said last year that Kraft Heinz could strike a huge deal in 2017.
“Similar to 3G’s approach in other industries such as beer, we regard its early food acquisitions as only initial steps to a long-term consolidation strategy,” the note said.