Kraft And Heinz To Merge, Form 3rd-Largest Food & Beverage Company In North America
H.J. Heinz Company and Kraft Foods Group Inc (NASDAQ: KRFT) announced on Wednesday that they have entered into a definitive merger agreement to create a new entity called The Kraft Heinz Company.
The Kraft Heinz Company will become the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world with eight $1+ billion brands and five brands between $500 million and $1 billion.
Shares of Kraft recently traded at $84.05, up 37 percent in Wednesday's premarket.
As part of the agreement, Kraft shareholders will receive a special cash dividend of $16.50 per share upon closing and stock in the combined company representing a 49 percent stake in the new company. Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) and 3G Capital will invest an additional $10 billion in the new company and existing Heinz shareholders will collectively own 51 percent of the new company.
Alex Behring, Chairman of Heinz and the Managing Partner at 3G Capital, said in a press release, "By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth. Our combined brands and businesses mean increased scale and relevance both in the U.S. and internationally. We have the utmost respect for the Kraft business and its employees, and greatly look forward to working together as we integrate the two companies."
Warren Buffett, chairman and CEO of Berkshire Hathaway said, "I am delighted to play a part in bringing these two winning companies and their iconic brands together. This is my kind of transaction, uniting two world-class organizations and delivering shareholder value. I'm excited by the opportunities for what this new combined organization will achieve."
The Board of Directors of the combined company will consist of five members appointed by the current Kraft Board, as well as the current Heinz Board, including three members from Berkshire Hathaway and three members from 3G Capital.
The transaction is subject to approval by Kraft shareholders, along with regulatory officials and is expected to close in the second half of 2015.
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