Heinz Management Just Gave More Insight Into The Kraft Merger

After meeting with H.J. Heinz Company's

management -CFO Paulo Basilio and Treasurer James Liu- on Friday, analysts at Stifel boosted their price target on shares of Kraft Foods Group Inc

from $90 to $95. They maintained a Buy rating on the stock. According to a report issued Monday, the meeting "offered a good reacquaintance with the Heinz business and further clarity around its future opportunity through the acquisition of Kraft Foods Group." A few highlights after the encounters: The Kraft Heinz Group will be worth about $28 billion. The merger will create one of the most profitable food companies in the world. The companies expect $1.5 billion in savings. "Revenue Growth: Investors commonly regard 3G [one of Heinz's owners] as extremely focused on margin and cash flow even at the expense of revenue growth. 3G has invested back into its businesses aggressively in the form of marketing and advertising with a focus on efficiency in spending." Mondelez International Inc

holds licenses to the Kraft brand overseas. When they expire, these could represent about $1 billion in sales opportunity, the firm says. The analysts also believe the new company will continue to seek M&A opportunities after consolidating. Stifel made some adjustments to its model for the combined company "with a number of puts and takes that result in a similar 2017 EPS conclusion - $4.05." They would note that each $200 million in incremental cost savings from the combined company could add roughly $0.12 to EPS and roughly $3 per share in value.