Two Major Food Companies Sign Merger Agreement

By Michael Bell Tuesday, April 14, 2015

heinz and kraft mergerH.J. Heinz Company and Kraft Foods Group, Inc. both Delaware Companies signed a definitive merger agreement to create The Kraft Heinz Company.

H.J. Heinz Company was founded by Henry John Heinz in 1869 in Sharpsburg, PA and is now headquartered in Pittsburgh, PA. It is one of the world’s leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition.

Heinz enjoys the number 1 and number 2 market share in more than 50 countries and sells 650 million bottles of its iconic ketchup every year.

Kraft Foods Group was founded in 2012 and is a consumer packaged food and Beverage Company with annual revenues of more than $18 billion. The company manufactures and markets food and beverage products including refrigerated meals, refreshment beverages, coffee, cheese, and other grocery products, primarily in the U.S. and Canada, under a host of brands.

This merger will create the third largest food and Beverage Company in North America. Under the terms of the agreement which has been approved by both company’s shareholders, Kraft’s current shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51% on a fully diluted basis.

Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. The aggregate special dividend payment of approximately $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital.

This creates a substantial value for Kraft shareholders as the special cash dividend payment represents 27% of Kraft’s closing price and will allow Kraft shareholders the opportunity to participate in the new company’s long-term value creation potential.

KraftThe combination of these iconic food companies together with the new company will have eight $1+billion brands and five brands between $500 million and $1 billion.

The new company, The Kraft Heinz Company, will be co-headquartered in Pittsburgh, PA and Chicago, IL.

 

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