Heinz to acquire Kraft to create worldwide food giant

Current Heinz shareholders will own 51% of the combined company, with Kraft shareholders owning a 49% stake
Current Heinz shareholders will own 51% of the combined company, with Kraft shareholders owning a 49% stake

The new company will be known as the Kraft Heinz Co. and it will get an investment of $10 billion from Berkshire and 3G

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25 March 2015 | 0

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Heinz is gearing up to buy Kraft in a deal orchestrated by Warren Buffet’s Berkshire Hathaway and the Brazilian investment company 3G Captial, that owns Heinz. This merger will create one of the largest food businesses in the world with revenues in excess of $28 billion.

The new company will be known as the Kraft Heinz Co. and it will get an investment of $10 billion from Berkshire and 3G.

Current Heinz shareholders will own 51% of the combined company, with Kraft shareholders owning a 49% stake.

Shares of Kraft jumped more than 14% before the opening bell today. Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. Each share of Kraft will be converted into one share of Kraft Heinz.

Buffett’s Berkshire Hathaway previously teamed up with 3G Capital two years ago to acquire Heinz and then helped finance 3G-owned Burger King Worldwide’s purchase of Canadian coffee-and-doughnut chain Tim Hortons.

“This is my kind of transaction,” said Buffett, “uniting two world-class organisations and delivering shareholder value. I’m excited by the opportunities for what this new combined organisation will achieve.”

Heinz chief Bernardo Hees will become CEO, while Alex Behring, Heinz chairman and managing partner at 3G Capital, will be chairman.

Kraft CEO and chairman John Cahill will become vice-chairman.

The deal still needs approval from federal regulators as well as shareholders of Kraft Foods Group, but the boards of both companies unanimously approved it.

It is expected to close in the second half of this year.

 

 

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