Washington: Ketchup maker H J Heinz Company and Kraft Foods Group Inc today said they will merge to create The Kraft Heinz Company, the fifth largest food and beverage (F&B) company in the world.
Brazil's 3G and Warren Buffett's Berkshire Hathaway, which bought Heinz for USD 23 billion, will invest an additional USD 10 billion in The Kraft Heinz Company.
"H J Heinz Company and Kraft Foods Group, Inc. Today announced that they have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third largest food and beverage company in North America and the fifth largest in the world," Heinz said in a statement.
Under the terms of the agreement, Kraft shareholders will own a 49 percent stake in the combined company, and current Heinz shareholders will own 51 percent on a fully diluted basis.
Commenting on the merger, Alex Behring, Chairman of Heinz and the Managing Partner at 3G Capital said, "By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth."
"Our combined brands and businesses mean increased scale and relevance both in the US and internationally," he added.
Kraft Chairman and Chief Executive Officer John Cahill said: "This combination offers significant cash value to our shareholders and the opportunity to be investors in a company very well positioned for growth, especially outside the United States, as we bring Kraft's iconic brands to international markets."
After the transaction closes, Alex Behring will become the Chairman of The Kraft Heinz Company. John Cahill will become Vice Chairman and chair of a newly formed operations and strategy committee of the Board of Directors, Heinz said.
Bernardo Hees, CEO of Heinz, will be appointed CEO of The Kraft Heinz Company.
Elaborating on the new management, the company said: "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 special cash dividend of USD 10 billion in the aggregate to existing Kraft shareholders will be paid upon closing and will be funded by an equity investment by Berkshire Hathaway and 3G Capital.
The company said that the transaction is subject to approval by Kraft shareholders, receipt of regulatory approvals and other customary closing conditions and is expected to close in the second half of 2015.
The Kraft Heinz Company will be co-headquartered in Pittsburgh and the Chicago area. The new company will have revenues of approximately USD 28 billion with eight USD 1+ billion brands and five brands between USD 500 million- USD 1 billion.
