Heinz buys Kraft in a deal worth more than $40bn £27bn

The company behind Burger King and Heinz buys Kraft in a deal that could value the US food giant at more than $40bn (£27bn). Heinz,

the US food giant Heinz is to merge with Kraft Foods Group, creating the third largest food and beverage company in the US, as shares

in Kraft jumped more than 40 per cent after the news. The company, will have brands including Philadelphia, famous for soft cheese,

and frozen potato-product company Ore-Ida. HP Sauce and Lea & Perrins, which produces Worcestershire sauce, are Kraft Heinz

brands likely to be familiar to people in the UK.

In 2010, Kraft took over chocolate firm Cadbury, but in 2012 and converted the firm as part of its global snacks business Mondelez,

which includes brands such as Oreo biscuits and Trident gum.

The deal was engineered by Heinz’s owners, the Brazilian investment firm 3G Capital, and billionaire investor Warren Buffett’s Berkshire Hathaway, who

bought Heinz in 2013, for $23m and took the company private.
The most successful American business magnate, investor and philanthropist of the 20th Century, Warren Edward Buffett born August 30, 1930, CEO and

largest shareholder of Berkshire Hathaway and consistently ranked among the world’s wealthiest people including the world’s wealthiest person in 2008 and

as the third wealthiest in 2011. In 2012 Time named Buffett one of the world’s most influential people. Buffett is called the “Wizard of Omaha” or “Oracle of Omaha”,

or the “Sage of Omaha and is noted for his adherence to value investing and for his personal thriftiness despite his immense wealth.
Jorge Paulo Lemann born in Rio De Janeiro, is a Swiss-Brazilian banker, ranked as the 26th richest person in the world by Bloomberg Billionaire. 3G was co-founded

by Jorge Paulo Lemann, who was a major shareholder in brewer InBev, Burger King and helped steer its 2008 acquisition of Anheuser-Busch, and also competed in the

singles Wimbledon Tennis Championships in 1962.
In 2010 bought the UK chocolate maker Cadbury for £11.5bn.
Kraft no longer owns Cadbury after spinning it off in a company called Mondelez, which also includes the Toblerone, Kenco and Oreo brands.
dex, with an estimated net worth of US$26.3 billion as of February 2015 and is Brazil’s richest man.
Current Heinz shareholders will own 51% of the combined company with Kraft shareholders owning a 49% stake.
The combined firm, Kraft Heinz Company, expects to make $1.5bn (£1bn) cost savings per year by the end of 2017. Its brands will include Kraft, Heinz, and hotdog maker

Oscar Mayer, with combined sales worth some $29bn.
Warren Buffett, Berkshire Hathaway chief executive, 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 organisations and delivering shareholder value. I’m excited by the opportunities for what this new combined organisation will achieve.”
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.” John Cahill, Kraft chairman and chief executive said: “We look forward to uniting with Heinz in what will be an exciting new chapter ahead.”

Kraft shareholders will receive a special cash dividend of $16.50 per share as part of the deal, as a special dividend payment of approximately $10bn is being funded by Berkshire Hathaway and 3G Capital.
Mr Behring will become chairman of the new company, Mr Cahill will be vice chairman, and Bernardo Hees, the chief executive of Heinz, will be appointed chief executive of the new Kraft Heinz Company

will be co-headquartered in Pittsburgh and the Chicago area.
Regulators and shareholders from Kraft still need to approve the deal, but the boards of both companies have unanimously approved it. It is expected to close in the second half of this year.
According to retail consultancy Conlumino, the top three US food companies in 2014 by sales were drinks firm Pepsico, food giant Nestle’s North American division, and Coca-Cola.