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According to the Wall Street Journal, Mr. Johnson could walk way with $200 million from the sale of Heinz (HNZ). When I first reported that it was a bad deal for the CEO, I was only calculating the shares held by Mr. Johnson, which amounted to $100 million at the sales price of $72.50, and I was not factoring in the change of control bonus that appears to double the CEO's take to $200 million.

Now, it's clear why the CEO took the deal, and it's also very clear that the common stock shareholders are being sold out too cheap, because of a special deal that only applies to the CEO and a few others. I have the utmost respect for Mr. Buffett, and I am very grateful for what he has shared with investors over the years. I recently enjoyed reading his annual letter to shareholders.

However, Mr. Buffett is taking away one of the best common stock investments available to the shareholding public, and in my estimation he's not even paying a premium for the business. I have written several articles comparing Heinz and Hershey (HSY), which demonstrate that Mr. Buffett is paying less for Heinz than Hershey trades for in the market, solidifying our case that Mr. Buffett is paying no real premium for Heinz at all.

We need a fund manager or other investor with the wherewithal to "step in" here and negotiate a better deal on behalf of shareholders as I have described in the Heinz arbitrage trade.

The Heinz arbitrage trade would allow an investor to purchase Heinz stock at the market price of $72.50 and hedge the downside risk of the deal falling apart with options. The risk in the trade would be the cost of the options. The upside is the price the negotiator could get for Heinz above $72.50 less the cost of the options.

If we use Hershey's 2012 EV/EBITDA of $20 billion/$1.1 billion, an 18 multiple, and apply this 18 multiple to HNZ with $2 billion in 2012 EBITDA, we get a sales price of $36 billion, less $5 billion in debt or $31 billion for $320 million common stock shares, which equates to almost $100 per share or nearly 40% higher than the current offer.

If the game wasn't rigged with change of control bonuses for those at the top, we common shareholders would demand $100 per share to sell this wonderful business. But we are being sold out too cheap.

Someone needs to step in and fight for shareholders, even if Mr. Buffett doesn't pay shareholders what the company is worth, $100 per share, a good negotiator ought to be able to get another 10-20% out of the deal in a few months or less, making the Heinz arbitrage trade very attractive.

Source: Heinz Arbitrage Trade: Reject Buffett's Offer II