NEW YORK - H.J. Heinz Co. is
buying Kraft Foods, creating one of the largest food
and beverage companies in the world with annual
revenue of about $28 billion.
The Kraft Heinz Co. will own Kraft,
Heinz, Oscar Mayer, Ore-Ida and other brands. Eight
of those brands have annual sales of $1 billion or
more and five others log sales between $500 million
and $1 billon every year.
The deal to bring together the two
companies, each more than a century old, was
engineered by Warren Buffett's Berkshire Hathaway
and Brazilian investment firm 3G Capital. The two
will invest another $10 billion in the new company.
Kraft Heinz will maintain
headquarters in Pittsburgh, where Heinz is based,
and also in the Chicago area, where Kraft resides.
Shares of Kraft jumped 26 percent
Wednesday before the opening bell.
Kraft shareholders will receive
stock in the combined company and a special cash
dividend of approximately $10 billion, or $16.50 per
share. Each share of Kraft will be converted into
one share of Kraft Heinz.
Current Heinz shareholders will
own 51 percent of the combined company, with Kraft
shareholders owning a 49 percent stake.
Annual cost savings estimated to
be $1.5 billion are expected to be booked by the end
Buffett and 3G Capital snapped up
Heinz in a deal valued at $23.3 billion two years
"This is my kind of transaction,"
said Buffett in a printed statement. "Uniting two
world-class organizations and delivering shareholder
value. I'm excited by the opportunities for what
this new combined organization will achieve."
Heinz CEO Bernardo Hees will
become CEO, Alex Behring, Heinz chairman and
managing partner at 3G Capital, will be chairman.
Kraft CEO and Chairman John Cahill will become vice
The deal still needs a nod from
federal regulators as well as shareholders of Kraft
Foods Group Inc., but the boards of both companies
unanimously approved it. The planned closing is set
for the second half of the year.
Kraft Heinz plans to keep Kraft's
current dividend per share once the transaction
closes. Kraft has no plans to change its dividend
before the deal is complete.