Ge has more cash to do things with. Time and mens fortunes change. You go with the flow. Every time they do a deal, they say its great for both parties. Stock goes up in one case and down in the other. Ge is in one, can use the money, comcast in another and actually worked. Worked out well. Comcast has a great set of assets now a ge has cash to invest in what they want to do. We all do it differently in our times. Jack, we love you, on valentines day especially. Happy valentines day. Merger thursday with all these deals. Huge day on wall street. Almost 100 million in fees for the banks. Center view bank. Make sure you join us tomorrow. Happy valentines day. Congratulations to squawk. What a breaking news. Warren buffett making a big deal with heinz. Im Carl Quintanilla from the stock exchange. Kramer is off. We hope aol call in. Heck of a week to take a vacation, one of the biggest months for m and a. Yeartodate, m and a volume up 25 . Berkshire hathaway, 3g buying heinz for 72. 50 a share. 28 billion in debt. I know youve been working this, too. The notion now buffett is prorking with operational partners important portends a new area. One after a flurry of phone calls, the power of the brazilians. We keep saying this name 3g. People might be somewhat familiar when they think about abm or the buyout of burger king. Really what 3g is is an Investment Vehicle for three of the richest men in brazil, some of the richest men in the world, frankly. One of them in particular. Jorge paolo. There it is. They tell us, jorge paulo on the board of gillette. He was the driving force behind this deal having approached Warren Buffett, not long ago. This happened very, very quickly. Something well start reading about, perhaps second day leads. Well bring it to you now, how incredibly wealthy brazilians are. These are bullet investments. In other words, not like a private equity fund where they raise a fund. This is their money. They put it in. 4. 4 billion put in by them, 4. 4 from Berkshire Hathaway, taking back a preferred 8 billion, which they will get 9 on. Well get the details for you. Thats the interesting point, carl. Your point interesting as well. They are buying this and they are doing to keep it. They are not going to take it public again. Again, its not a private equity model. They are going to keep it. The likelihood, this new partnership between berkshire and 3g, from what i hear, maybe they look for another company to buy. Then you get synergies, not readily available right now through this purchase of heinz. Another company to buy and combine in this space with heinz. Therefore, the move higher we were seeing across the packaged foods area this morning. I dont want to get ahead of ourselves. This is something that will take years. My point, unlike again private equity, this is not. 3g is not, berkshire obviously is not. They are going to keep this thing and potentially have it forever, be a private company heinz. Down the road, you could expect once they put a new Management Team in place and everything else, you will get other acquisitions. Still, you cant ignore a bud, a burger king, now this. They seem to be making a few plays within a targeted space. Lets bring in becky, of course, spoke with buffett about the deal earlier this morning. What a morning. This has been a heck of a morning, guys. Ive been listening to the conversation around the table. What weve been talking about is how this really is stepping up the amount of deal flow coming through. We had some statistics earlier today that with this deal between berkshire, 3g and heinz, this actually raises the United States m and a to over 182 billion for this year alone. If you put this on track to where we were last year at this time, it was only 58 billion. There is the sense m and a starting to free up and really starting to get moving. We did speak with Warren Buffett earlier this morning. The deal, you guys have been laying out the terms of the deal, 20 premium from the Closing Stock price yesterday. The way its structured, buffett and berkshire will be getting half the equity in the deal. The other half, of course, going to 3g. Buffett because they are putting up more money gets 8 billion of preferred stock. We spoke with them a little bit earlier this morning and here is how he laid out the terms of the deal. Listen to this. Were putting up more of the money but well be an equal Equity Partner with 3g. And there will be 8 billion of preferred stock and well eat a fraction billion of the common equity, well split the equity. But were a Financing Partner in additi addition, and they are the operational guys. Again, made it clear 3g are going to be the operational guys. He believes the ceo will be staying on. Hes done a good job with things at this point. Also talked about how 3g has done a great job with partnerships they have been involved in, pointed to burger king over the last several years and some of the costs they were willing and able to get out of the business and how they made that a much more profitable business. Talk to a little about what hes been looking at. Apparently this happened in early december. David faber talking about how this was a very new deal. He said his friend jorge paulo came to him and started talking about this. They were on a plane ride together. Thats when they first brought it up in early december. Hes had a file on heinz back to 1 1980. This is one of the Many Companies he thinks about all the time. When the right opportunity came olong, thats when they were able to pounce and jump in. Buffett said at the end of 2012, berkshire had about 47 billion in cash on hand. He says he always wants to keep 20 billion around. This deal is 12 to 13 billion hes putting in. That still leaves him with 15 billion and counting that he can still look for acquisitions. Always talks about how hes on the hunt for the next big elephant. This one of those situations. The cash builds from month to month, so the gun is always getting reloaded. Just because they are doing this big deal doesnt mean they arent always looking for another deal to come along. When we were on the phone with buffett, we got a chance to talk about a few other issues including how he sees the economy right now. While we hear from strategists, they think other International Markets are the place to be, buffett thinks still the United States is the best place to invest money. Listen to what he thinks is happening with the economy right now. Its really been remarkably similar since the late summer of 2009. Its slowly been improving. Sometimes the sentiment gets stronger, sometimes weaker. The economy, if you look at our businesses, they have steadily gotten better but not at a fast clip. That continues right to this day. The carloadings of the burlington in january and somewhat in february. Coal is down, oil is up. As everybody knows, housing is coming back with a fair amount of strength now from an extremely low base. The economy continues to improve but it doesnt do it as a rapid clip. A couple of other issues we did speak about with mr. Buffett this morning included moodys. Berkshire owns more than 10 of moodys. Obviously the stock has been hit hard because of the lawsuit against the s p. He did say they have not changed their ownership or sold any of that stock in over a year. He said he has to see what the facts are with the s p case but he said it must think that moodys would obviously be a secondary logical target if the government wins that case against s p. And we also talk to him very briefly about a couple of other issues, brought up nyse, all the stories about his interest in the nyse. He said while someone at berkshire was contacted it was not him. He was not contacted person and he did not have any interest in the nyse on that part of it. He talked about this deal, 20 on the opening stock price, more than 72. 50, because it was strayeding above that, heinz stock above that. He said no way, youre not getting another penny out of him. Guys, ill send it back to you. Considering the stock was hitting an alltime high, 20 premium on top of that is a rich multiple. When you get 20 of your alltime high, interesting here, bill johnson, the longtime ceo who fought off nelson peltz years ago. He became a board member. My reporting, seems clear they know the potential strategics out there, had conversations with many of them. It is seen as highly unlikely that somebody would come in here at this point and try to top this. Youre talking about a deal done roughly 14 times, current ebitda, done in the same sector, 12. 5, 13, a high price to your point, even though the premium itself not as high as some might say. Wait a second, take out, it is the alltime high. Johnson moved the company sharply into emerging markets which will comprise 30 of revenues. Hes obviously gone from mega brands. You know, hes done a good job in leading this Company Every since that challenge from peltz especially over the last year. Not expected youll see somebody come over the top here. One never knows but to the point of the stock trading above the price, that was a little strange. Interesting to watch buffett buy something that wasnt at a discount relative to its most recent performance. He is getting 9 on his preferred. He always like that. Manages to get a nice one man we wish were at the table but on vacation jim cramer. You know he never stops working. Good morning to you. Youre on the phone. Id love to get your thoughts on the deal and the week. First, terrific deal for buffett. Lets not forget this stock until coming into this year had done nothing in five years, increased its cash flow rather dramatically, even though earnings per share were up very, very big. This is another one of the stocks that has done kind of like, around there gross profit 3. 5 billion four or five, 3. 2 then, 3. 53. The stock up 3, 4 over a four or fiveyear period. I dont think hes overpaying in the longterm. The first stop i ever bought for money for my hedge fund, i knew there would never be a chinese bottle of ketchup or japanese bottle of ketchup. This is one of the most iconic brands. Hes done a great job what we thought was on board. However, in the last two years hes been kept back by the frozen food division. Its down. 15 of heinz total sales, talking about frozen potatoes. He tried to take a price increase, failed badly. Its one of those cases where the company may have been out of steam for now, but the brand never lost their luster. Jim, in premarket trading, were watching a lot of the other Consumer Food companies trade higher as well. Campbells, kelloggs, General Mills. Is this because theres a thought these are now somehow perhaps takeover targets or the multiple accorded to heinz should now be applied to the other Food Companies as well so they should be trading higher. I think the big one goes for multiple analysis youre talking about. A lot of these others are tough buys. Conagra did an acquisition early this week. Kellogg campbells, 10 billion forever. I think natural foods. General mills will acquire the group that used to be the subject of tremendous acquisitions, kraft, the quarter didnt look so good. I think those who buy these stocks expect another bid. Isnt going to work. Thats why i think youre able to see them at something more than 10 more than they were a couple years ago. The gross millions were there. If you want iconic brands, always wants, buy immediately, which you can do, it does make sense. It doesnt make sense to buy General Mills at 45, with a bid at 52. Jim, i mean, you know, again, we watch that stock price trade above the 72. 50, which i thought was a bit strange. These guys know all strategics that are out there. That said, the deal happened quickly, paulo approached buffet, they got together. They got a deal together very, very fast. At the same time they know the landscape pretty well at heinz. Hes been talking about consolidation in this arena for a very long time. Overbid buffett, thats not going to happen. After what happened [ inaudible ] people get a little too excited. No one trumps Warren Buffett and lives to tell the tale. Thats not something you do. If i were at Morgan Stanley i wouldnt pitch anybody on this, Warren Buffett, thats a losers game. Nice trade, find the next one. Finally, jim, you know, weve put it all together, the comcast ge deal, dell, new york stock exchange, amr usair, cardinal health, welch said it, money is not the issue. Does this set the table for a bigger 2q rest of the year . Youre right, carl. Whats so great im going to bring a gigantic back to faber who did not believe me when i said it would be the year of the deal. Sounds like hes saying, jim, you better realize its the year of the deal. I like when you put words in my mouth and then argue against them. I didnt necessarily say it wasnt the year of the deal. I just like to temper your enthusiasm. Thats what im here for. This is payback temper for you calling him the smartest man in the universe. He hasnt gotten over this. Historically, and david and i like to joke about it, the truth is size of the deals is big. The best way to play it is with the bonds dealers. David, how much is this deal Goldman Sachs versus the new m and a guy, goldman for 2013. Its an interesting point, although i will make another point which well start to hear more about. Everybody advising the deal was boutique, centerview, quite a run, moulson company involved. You have very little participation from the big names, jim, in this deal on the advisory side. Buffett youre right. Buffett has got his own people. Sure. Historically he has terrific people on his team. I do think the m and a departments have, theres a lot of calls to make. I was with byron over super bowl weekend, Warren Buffett bankers, keep in mind dpolds guy. I do think phone calls to companies today saying, listen, everyone doing it, get involved, stocks are cheap. Jim, we expect to see you tanned, rested and ready next week. Youre actually going to see me like this. This is the warmest and best vacation in a excluded area. How about that. Jim, enjoy. Thanks for coming to the phone. Well see you soon. Thank you guys. Talk to you soon. Cramer talking berkshire deal. Road map including stories were watching. This other deal, 11 billion one between amr and us airways to create the Largest Airline. Nine out of ten domestic flights will be on one of four areas. Is that sectors consolidation over. Global markets a lift from gma, disappointing from japan to germany to france. Is the rest of the world teetering on recession. European losses get a little worse. Company expects breakeen results by 2015. A lot more squawk on the street is after the break. To c. Ashley, ashley marshall. Here. Since were often all on the move, ashley suggested we use fedex office to hold packages for us. Great job. [ applause ] thank you. And on a protocol note, id like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh im sorry guys. Ah sometimes the caps lock gets stuck on my keyboard. Hey do you wanna get a drink later . [ male announcer ] hold packages at any fedex office location. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. Skies to create the Largest Airline. American airlines parent amr are merging in a transaction 11 million. Phil lebeau. Wrapping up a Conference Call going over the particulars of this merger. Here are the numbers to take a look at. An 11 billion all stock deal. Here is the way it breaks down. 72 by amr creditors, the others by usair shareholders. When you take a look at the combined airline, you have the number three and number five before the merger coming together. They are now the largest in the world. You look by seat miles they are larger than united, delta and further down you see southwest and jetblue. Here is ceo of the new American Airlines doug parker talking about why this is a good deal for consumers. Between our two airlines, 900 routes, only overlap on 12, most are hub to hub like charlotte to dallas, voefr. Very little overlap, highly complimentary. We expect to continue to fly, continue service out of all the hubs we have, service to the communities we have. Thats good. Take a look at shares of us airways over the last years, up more than 60 , moving higher today. Whats interesting, carl, a number of analysts put out notes as soon as this merger was officially announced and they are all complimentary saying, yeah, the consolidation game appears to be over but discipline has people confident on wall street that Earnings Growth will continue for the airlines. Well see. This is an industry that doesnt have a lot of good track record when it comes to maintaining that discipline prof parker tried to suggest on some morning shows fares wont rise as a result of this deal. I wonder if you believe that whatsoever . You know, if you look at the studies going over consolidations in the industry, generally speaking you do not see a huge increase post consolidation after two airlines get together. Really thats a reflection of the fact you have more low Cost Carriers in more markets around the country. Southwest is a big driver of that. Thats really the ultimate penetrator in terms of keeping those fares low. Great story, phil. Appreciate that. Phil lebeau joining us on amr. When we come back, will the markets feel love on valentines day. Well talk to art cashin as we count down to the opening bell. Gdp numbers around the world, not too good, which is one reason weve been able to dig out of the red despite a flurry of action. Squawk on the street live ahead. How do traders using Technical Analysis streamline their process . At fidelity, we do it by merging two tools into one. Combining your customized charts with leadingedge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. We like this idea so much that weve applied for a patent. Im colin beck of f