Kraft and Heinz agree megamerger backed by Berkshire Hathaway and 3G Capital
Updated : 11:02
Food giants Kraft and Heinz have agreed a megamerger to form the publicly listed Kraft Heinz Company, which will be the fifth largest food and beverage company in the world.
As part of the stock and cash merger, Heinz's joint owners Berkshire Hathaway and Brazil's 3G Capital will invest an additional $10bn and will take a 51% stake in the combined company, which will return the baked beans-maker to the public markets.
Shareholders in Kraft, which at Tuesday's closing price was valued at around $36bn, will receive a special cash dividend of $16.50 per share and will own 49% of the combined company's stock.
The combined group will have revenues of roughly $28bn and its portfolio will include eight brands worth more than $1bn and five more worth $0.5bn-$1bn.
Heinz was snapped up from the Heinz family by 3G Capital and Warren Buffett's Berkshire Hathaway for $23bn in 2013, with the pair each owning 50% and taking the company private in what was the food industry's largest ever deal.
Wednesday's merger appears essentially to be an equity transfer, with 3G Capital pushing Heinz and Kraft together, then cashing in on holdings in the former as it rejoins the public markets.
Alex Behring, chairman of Heinz and the managing partner at 3G, said: “By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth."
Buffett added: “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.”
In February, 3G Capital was rumoured to be interested in the Campbell Soup Company and has also worked with Berkshire Hathaway on a number of other corporate takeovers.
Kraft recently spun off its Cadbury’s, Toblerone, Kenco and Oreo brands into a separate commercial entity Mondelez.