Heinz and Kraft Merge to Make 5th Largest Food Company in the World
Heinz and Kraft will merge, creating the US's third largest, the world's fifth largest food company.
The news was announced in a press release from Heinz. The new company's named will be the Kraft Heinz Corporation and will have two headquarters, with one in Chicago and the other in Pittsburgh.
The total revenue of the new company will be more than $28 billion, thanks in large part to the fact that the merger means that eight different brands valued at more than $1 billion will now be consolidated into one company. Another five brands in the new company's portfolio are valued between $500 million and $1 billion.
Among those valuable brands are Philadelphia, Kraft, Heinz, Oscar Mayer, and Ore-Ida.
"We are thrilled about the unique opportunities this merger will create for our consumers worldwide, as well as our employees and business partners. Together, Heinz and Kraft will be able to achieve rapid expansion while delivering the quality, brands and products that our consumers love," said Bernardo Hees, Heinz Chief Executive Officer.
The merger is a big payday for owners of Kraft stock as they will receive a dividend of $16.50 per share. In total, current Kraft shareholders will own 49 percent of the new corporation. Heinz shareholders will own 51 percent.
The merger also comes with a promise of hefty investment from Wall Street guru Warren Buffet's company Berkshire Hathaway, and a Brazilian finance firm called 3G Capital. Both companies will invest a total of $10 billion in the new company.
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."
