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Mega-merger forms The Kraft Heinz Co.

Mega-merger forms The Kraft Heinz Co.
Merger results in the 3rd largest food and beverage company in North America.

The proposed merger to form the world’s fifth largest food and beverage company will have revenues of approximately $28 billion with eight $1+ billion brands will be co-headquartered in Pittsburgh and Chicago areas.

Today’s announcement of the merger between the H.J. Heinz Company and Kraft Foods Group changes the landscape in the consumer packaged goods segment. And it likely has ramifications for packaging vendors sooner or later. While that will unfold in the months ahead, what’s known now is that the integrated company:

  • Creates the third largest food and beverage company in North America and the fifth largest in the world;
  • Joins two portfolios of beloved brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia;
  • Has eight $1+ billion brands and five brands between $500 million and $1 billion;
  • Presents substantial opportunity for synergies of the increased scale of the new organization and sharing of best practices and cost reductions;
  • Will result in increased investments in marketing and innovation and an estimated $1.5 billion in annual cost savings implemented by the end of 2017;
  • Offers strong platform for organic growth in North America, as well as global expansion, by combining Kraft's brands with Heinz's international platform.

Under the terms of the agreement, which has been unanimously approved by both Heinz and Kraft's Boards of Directors, Kraft 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.

The press release via PRNewswire is available here.

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