captioning sponsored by wpbt >> this is n.b.r. >> susie: good evening. i'm susie gharib. tom is off tonight. hungry for a deal, warren buffett partners up to buy up ketchup maker heinz in a $28 billion deal. the u.s. airways/american airlines merger is ready for take-off, and the companies say they see no turbulence ahead from washington regulators. and senate democrats offer their plan to head off the sequester's sharp spending cuts. we get the details from michigan senator debbie stabenow. we have that and more tonight on "n.b.r." two big sweetheart deals on this valentine's day: american airlines is merging with u.s. airways, creating the world's largest airline company; and warren buffett is buying h.j. heinz, the biggest food company acquisition ever.

we'll have more on american in a moment, but we begin tonight with buffett and that surprising mega-food deal. the billionaire investor is teaming up with the billionaire owners of 3g capital to buy the ketchup maker for $28 billion. the private equity group and buffett's berkshire hathaway are paying $72.50 a share in cash. that's a 20% premium over heinz's closing price yesterday. ruben ramirez reports. >> reporter: the oracle of omaha now has a new title: ketchup king. for the first time, warren buffett, who's shied away from working with private equity partners, is teaming up with 3g capital in a $28 billion deal-- close to $24 billion of that in cash and the assumption of $4 billion in debt-- to take h.j. heinz private. >> warren buffett is starting to get older at this point, and, in this case, he's having 3g handle the operational side of this transaction. >> reporter: while buffett's age may be advancing, he's still

very interested in doing deals in well-known brands. it's not the first time buffett has partnered to do a deal. five years ago, berkshire worked with mars in a $23 billion acquisition of wrigley. and just last year, berkshire was part of an unsuccessful $10 billion bid by coty to buy avon. but new york university business professor aswath damodaran says this deal is all about the experience 3g's team brings to the table. >> the one thing they have going for them is, they've run other companies very well in brazil for a long time. and these are people with a long history in consumer products. >> reporter: others say 3g, like buffett, is in it for the long- haul. >> 3g likes to hold its investments for the long-term, so it doesn't look to, like, buy then sell in a few years like a lot of private equity firms. >> reporter: 3g is run by jorge paulo lemann. he and buffett both served on the board of gillette. 3g capital snapped up burger king two years ago. the fast food chain has been

aggressively overseas. analysts say we could see more well-established u.s. brands look to do deals with partners in fast-growing emerging markets as a way to spark growth. ruben ramirez, "n.b.r.," new york. >> susie: steve farley is familiar with warren buffett's recipe for success. his new york investment firm, farley capital, has held berkshire hathaway stock for two decades. >> so, steve, we know that warren buffett likes bargains. he's a penny pincher, self-described. and here he's paying a 20% premium for h.j. heinz. are you concerned he's overpaying? >> i'm not. i think first of all, the way buffett, what he is concerned about is the price he's paying for the value he's getting. it's really irrelevant to him what premium he is paying to what price someone else pays a week ago. it's really irrelevant. it's the price he's paying and value es's getting and i think he's getting good value. >> susie: berkshire hathaway stock rose a little on the news.

does it make sense to put new money to buy berkshire a shares at $149,000 a share or even the b shares at close to the $100 level, what do you think? >> well, you know, for years there have been people that thought they would be overpaying for berkshire. i have some in my portfolio we bought at $8,000 a share. >> susie: wow, that's great. >> didn't want to pay $9,000 a share. and so this is a stock where it's probably more important do you own it rather than historically than what price you paid. because he's always delivered for shareholders over the long-term. >> susie: are you going to be adding to your position as a result of this deal? >> i don't think so. like most berkshire shareholders i'm a long-term shareholder. i don't trade the stock. i think this is consistent with the way he has run the company. he has continued it to make acquisitions that have added value for shareholders. but this is more of the great, good stuff that warren buffett does. >> susie: speak of acquisitions, even after this heinz deal berkshire

hathaway will still have billions of dollars of cash, more than 20 billion. and a lot of people were speculating today sort of what is next. what is going to be the other big deal. what are your thoughts on that? >> well, i think he seizes opportunities. and these things, these are big companies and it's the kind of company he likes. it's ketchup. he likes predictable businesses like that. big, predictable, good businesses don't become available every day, so it's really going to be a question of when the opportunity as rise and when he sees a good company, that's the kind of business he wants, at the kind of price he wants to pay, he'll do it. >> susie: you know what was interesting in this particular deal was that buffett didn't go in this alone on a handshake and just buy from h.j. heinz. he teamed up with these private equity guys. do you think this is a new paradigm of future deals that buffett is going to be working with those billionaires from 3g capital? >> well, i think what i have learned over the years is never to be surprised by warren buffett. he's a brilliant investor.

and he -- charlie monger once said the amazing thing about warren buffett is he keeps learning. es is in his 80s and he's still learning. i think he thinks the world of these people as partners. i think he is always willing to go buy a great business with great partners at a great price. >> susie: that's true. he's a remarkable investor. thank you so much, steve, we appreciate you coming on the program, steve farley of farley capital. >> thank you. >> susie: we turn now to today's other big corporate marriage. this one was expected. after months of negotiations, american airlines and u.s. airways unveiled an $11 billion deal. the new company will fly under the american airlines name, and it will be run by u.s. airways' chief executive, doug parker. but what will it mean for consumers? suzanne pratt has the story. >> reporter: love may be in the air for american airlines and u.s. airways, but will

passengers love this marriage? there are at least a few reasons they just might, including increased access to new destinations and a chance to combine their frequent flier miles. but what about ticket prices? once the merger happens, the majority of the u.s. air travel market will be controlled by just four companies: american, delta, united-continental and southwest. frequent flier mile expert brian kelly says consumers should expect to pay more, at least on some routes. >> because there's consolidation, i do think that, as planes get packed again, we'll see fares shoot up again, especially if oil starts to rise, as well. >> reporter: other airline experts say ticket prices are unlikely to take off as a result of the merger. they point out there have been a lot of big airline deals in the last decade, and yet airfares on average have barely budged. and for those road warriors looking to fly free by redeeming their miles, american's

advantage program is likely to remain in place. that's good news for frequent fliers. >> so, american actually lets you make changes to your dates for free. they're one of the most lenient when it comes to miles. so, while u.s. airways might lose some, they might actually get some enhancements, as well. >> reporter: but before loyalty programs can be combined, regulators will have to approve the merger. at least one antitrust expert thinks it's a done deal. >> yes, i think the merger is going to be approved because it's taking two competitors who aren't as effective in competing right now, allowing them to consolidate, create significant efficiencies, and those efficiencies will lead to lower prices and better service for consumers. >> reporter: we'll have a better idea if that prediction holds true when and if the deal closes sometime this summer. suzanne pratt, "n.b.r.," new york. >> susie: our next guest says the u.s. airways and american airlines merger is a positive for the industry and travelers.

he's ray neidl, airline analyst at nexa capital. ray, if this is such a positive for the industry, why is it that all of the airline stocks were down today? >> well, i have been telling people about u.s. air waste stock in anticipation when the deal is announced, sell it. and what about all the others, i mean if you look at these stocks now, whether it's delta, united, continental or southwest, they were all down between 1 to 4% today. >> basically it was probably other developments that did that. the merger is going to be positive long term. the reason why i said buy in anticipation, sell on doing the deal is u.s. airways is going to face a big challenge now for the next year or two combining two systems. but overall, it is a major positive, it's a final chapter on the deregulation and we're going a new book where airlines will benefit

from new technology. >> susie: certainly it is complicated and complex to integrate two big airlines. so what do you think executives over at delta and united continental were talking about today. are they going to be making any changes now that this merger is official? >> well, this is probably one of the most anticipated mergers ever, which again is the reason why it didn't have any effect on the stock prices today, i would guess. and these people were expecting it. they're planning for it. and they were, believing that the industry will benefit by having these two weaker carriers combine into what will eventually be one strong carrier. >> susie: and what about travelers. you heard suzanne pratt's report about ticket fares. a lot of people are concerned about it. you have been covering the airline industry for years. you've seen all of these mergers. what does this mean for ticket fares? >> ticket prices will solidify. we won't have the giveaways we've had for the five or

ten years before. this was a trend that was developing already as airlines were better controlling capacity. and this will just add to that. it's still very competitive industry, however. you've got four really big carriers out there that will be competing for the consumer dollar plus some niche fringe carriers. so it's going to be competitive but it's going to be rational pricing by the airlines going forward, i believe. >> susie: real quickly, just a few seconds left. air american airlines has a number of orders for the boeing 787 that has been ground. when do you think that boeing plane will get back up in the air? >> i wish i knew. i think boeing wishes they knew. it has been grounded longer than i expected but they have to make sure they identify the problem positively before they can do a fix. so that's very important. >> susie: ray-- . >> susie: ray, do you have any dis-- disclosures, do you own any of these airline stocks? >> no, i don't. >> susie: ray, thanks so much for coming on the program, really appreciate it. ray neidle, airline analyst

at nex capital. >> reporter: i'm erika miller. still ahead, i'll tell you how the nation's biggest bridal chain is attracting new business with a new designer partnership. >> susie: on wall street today, not much love for stocks. despite billions of dollars worth of corporate marriages, investors felt little attraction for stocks. they even shrugged off some encouraging news about the job market. the number of people filing new claims for unemployment benefits fell by 27,000 last week to a seasonally adjusted 341,000 claims. this is the fourth time new claims have fallen in the past five weeks. by the close, stocks barely budged; the dow fell nine points, the nasdaq added almost two points, the s&p was up a point.

>> susie: the stock market spent much of the day flip-flopping between gains and losses. in addition to economic data from the u.s. and europe, investors focused on a slew of earnings. taking a look at big sector movers: telecom stocks were hardest hit, falling 2%. but on the plus side, energy rose slightly. now, let's take a look at some of the day's big earnings reports. whole foods posted a 24% gain in first quarter profits. both sales and margins also improved. but the stock wilted, falling nearly 10% to $87.50. and that's because the company warned of weaker sales and margins for the rest of this year. but that decline was small potatoes compared to the big drop in weight watchers stock, down 17%. earnings plunged in the fourth quarter due to higher costs as well as thinner attendance at its weight loss meetings. the company also warned earnings this year will be far below

expectations. "angie's list" was a huge gainer. check out this chart! the company surprised wall street by reporting a fourth quarter profit instead of a loss. that pushed the stock up more than 20%. the online review site was able to cut costs while boosting revenues. angie's also expects first quarter sales to come in ahead of estimates. skechers also swung to a fourth quarter profit thanks to big gains in sales of women's shoes. earnings were much stronger than expected, catapulting the shares over 10%. now, besides the deals for heinz and a.m.r. that we told you about at the top of the program, there were some other deals in the spotlight today. investors slurped up anheuser- busch shares on optimism it will get u.s. regulatory approval to buy mexican brewer grupo modelo. that's the maker of corona beer. anheuser is offering to sell the rights to corona and other grupo modelo brands in the united states to constellation brands as a concession to get regulatory approval. shares of constellation skyrocketed 37% to almost $44

while annheuser rose more than 5%. cardinal health, the second- largest distributor of prescription drugs, is buying a large, privately held medical supplier called assura-med. the $2 billion deal will allow cardinal to expand into home health care, and its stock rose 1% to $46. and then best buy's founder, richard schulze, is reportedly thinking about giving up his plan to take over the troubled electronics chain. instead, there's speculation he may line up investors to take a minority stake in the company. the stock ended today up almost 4%. and finally, three of the five most active exchange traded funds settled lower. and that's tonight's "market focus."

>> susie: mark your calendar for march 1. it's an important date because that's when the sequester's automatic spending cuts take effect. and it could happen because so far congress is still far from a solution. republicans say no to tax increases, but today senate democrats said they could head off most of the sequester's cuts if we just raise taxes on the wealthy by $54 billion. darren gersh sat down today with michigan senator debbie stabenow. she's a key player on the senate democratic leadership team. he began by asking her why democrats also want to cut direct payments to farmers to help replace the sequester. >> we have very tough decisions to make. and in the farmbelt that's exactly what we did. we looked at every single page, what works, what doesn't. and what's the priority, what should taxpayers pay

for, what shouldn't they pay for. and we determined that a subsidy that went to farmers, regardless of their loss, so high prices, good times, you still get a government payment didn't make any sense. >> one of the things some farm groups are saying right now times are good for farmers but they won't always be good. so what happens when prices go down? >> well, we absolutely as-- as a nation need to be there for our farmers and ranchers during hard times because we have a stake in having the most stable, affordable food supply in the world. that's why in our farm bill we expand on what's called crop insurance. you have a bad year, you're going to get some help. we also do other things to sport farmers with conservation practices and other things that make sense. research, so critical, testing testing avoid the sequester, does that mean that farmers have

given at the office and they're to the going to have further budget cuts in other budget deals? >> yes, yeah, one of the things that i have insisted on is that this counts as the full cut for agriculture under the sequester. it's only fair. >> so one of the things that is in this package that some democrat -- democrats are asking is ending the tax break for companies that ship jobs overseas. when you look at the proposal, it's $20 million a year. now we hear this proposal a lot, ending tack breaks for companies that ship jobs overseas. but at $20 million a year isn't it just symbolic? >> this is my bring jobs home act. it's a very important principles. there are more loopholes that we need to close, no question. but step one is saying you want to move, we're not paying for your moving expenses, you're on your own. >> we're only a few weeks away from the sequester taking effect. and senate democrats are proposing things that republicans have ruled out like the buffett rule which say minimum tax on people making a million dollars a

year. that doesn't sound like an effort to negotiate the differences in the final weeks to make sure this doesn't happen. >> well, this proposal includes an agriculture cut that we agreed to on a bipartisan basis, came out of our committee on a bipartisan basis, passed the senate? bipartisan and included in the house farm bill that they reported out on a bipartisan basis, so certainly that provision meets the test. so to get to the magic 4 trillion that we're talking about, the other economists says we ought to get, that is 1.5 trillion more. and i don't believe that we ought to ask middle-class families one more time to sacrifice to get there. this ought to be equally shared. >> senator debbie stabenow, thank you for your time. >> you're well come-- welcome.

>> susie: high drama on the high seas this week for carnival cruise lines and its travelers. carnival shares are down almost 5% this week since an engine fire left one of its cruise ships stranded in the gulf of mexico with 4,000 passengers on board. after four days of drifting with no power, the "triumph" is being towed today into the port of mobile. carnival says passengers will receive a full refund, a voucher for another cruise and $500. the cruise operator expects the incident to cut eight to ten cents a share out of its first half earnings, and it has already cancelled the "triumph's" next 12 voyages. valentine's day is a popular day for popping the question, and that makes february an important month for the bridal industry. chains like david's bridal see a surge in dress sales in the second half of the month.

erika miller took a trip to coshohawken, pennsylvania, for a behind the scenes look at the nation's biggest bridal chain. >> reporter: this valentine's day, we're going to talk about something sweet-- melissa sweet, a high end wedding designer who recently launched a mass-market collection at david's bridal. >> my gowns are very thoughtful, i like to think. they incorporate a lot of details in a very balanced way to create this subtle but very intricate story. >> reporter: she joins vera wang, who also designs a line at david's. the company's c.e.o., bob huth, says designer partnerships are key to growth. >> the more we are differentiated from a brand perspective and a design perspective-- we have something that says "i want that, i want him, or i want her"-- you win. >> reporter: the chain has come a long way since 1950, when david reisberg started a bridal boutique in fort lauderdale selling closeouts.

now, david's is by far the nation's largest bridal chain with over 300 stores. one out of every three u.s. brides walks down the aisle in a david's gown. dresses start at just $99. today, all the gowns sold at david's are exclusive designs, and most are bought off the rack. >> most women prefer to do that. they don't want to order something and say "i hope it fits," particularly if you order something at most places and it takes four to six months to get it. >> reporter: david's bridal is headquartered in conshohawken, pennsylvania, in a former mill that dates back to 1874. although bridal gowns are still the majority of sales, the chain also sells bridesmaid and prom dresses. >> both of those are channels to our future business. if you think about it, a decent number of bridesmaids are not married, so you are really setting up an opportunity to say, "come back and try us." >> reporter: check out this closet at headquarters filled with bridesmaid and special

occasion dresses from previous seasons. >> this has done pretty well, actually. >> reporter: this one has done well? >> yeah, yeah. >> reporter: why? >> just the diversity of color, a lot of bling. >> reporter: david's was bought by private equity firm clayton dublier and rice for $1 billion back in october, which makes you wonder if the chain, which was briefly public back in 1999, will go public again. >> it would seem logical that that would be not a surprising step. >> reporter: but for now, the company is focused on its core business, helping brides like kabree still find their dream wedding gown. what made you pick this dress? >> it's just beautiful, it looks nice, it fits me great, and i was glowing. >> reporter: erika miller, "n.b.r.," coshohawken, pennsylvania. >> susie: you can't go down the aisle without a ring. as the street's lindsey bell reports, these days, more and more couples are choosing colored diamonds. ♪ diamonds are forever.... >> reporter: february is one of the most popular months of the year for diamonds. no surprise, given that six

million couples are expected to get engaged on valentine's day. that's a lot of bling. thanks to many celebrities, there has been a growing trend of engagement rings with colored diamonds. many women find pink diamonds the most attractive. it's no coincidence they're the most expensive. yellow stones are also showing up on more fingers. they are more affordable. and then there's chocolate, as in chocolate diamonds. >> the women of today wants to be different, and color allows a woman to express herself and her individuality. >> reporter: diamonds have always been a girl's best friend, but the appreciation in color diamond prices has wall street interested, too. more and more people are getting to know diamonds so the demand is growing but the supply is staying the same or even getting less. >> lesser known chocolate diamonds may still be

>> because for many years people had thought that these are low quality; they have been sold at a discount, at a lower price even though they are thousands of times rarer than the white diamonds. and little by little, people are catching on. >> reporter: still, investing in diamonds takes a lot of cash. the opportunity to trade them is limited, and knowing the quality can be tough. but the good news is, there are alternative ways to buy them. >> given the challenges of investing in physical stones, purefunds partnered with the i.s.e. and factorshares to build an e.t.f., an exchange traded fund, that invests in publicly traded companies engaged in the diamond gemstone industry. this includes companies that mine rough stones and retailers that sell polished stones. >> reporter: whether you prefer wearing diamonds or investing in them, diamonds will always be forever. i'm lindsey bell with the street, for "n.b.r." >> susie: and that's "nightly business report" for thursday, february 14.

happy valentine's day, everyone. have a great evening, and we'll see you online at www.nbr.com and back here tomorrow night. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> join us anytime at nbr.com. there, you'll find full episodes of the program, complete show transcripts and all the market stats. also follows us on our facebook page at bizrpt. and on twitter @bizrpt.

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