H.J. Heinz, Kraft Foods to merge

March 25, 2015

H.J. Heinz Co. and Kraft Foods Group Inc. have entered into a definitive merger agreement to create The Kraft Heinz Co., forming the third largest food and beverage company in North America. 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 combination of these food companies joins together two portfolios of big name brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida, and Philadelphia. Together the new company will have eight $1+ billion brands and five brands between $500 million and $1 billion. The complementary nature of the two brand portfolios presents substantial opportunity for synergies, which will result in increased investments in marketing and innovation.

“By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth,” said Alex Behring, chairman of Heinz and the managing partner at 3G Capital. “Our combined brands and businesses mean increased scale and relevance both in the U.S. and internationally. We have the utmost respect for the Kraft business and its employees, and greatly look forward to working together as we integrate the two companies.”

“Together we will have some of the most respected, recognized, and storied brands in the global food industry, and together we will create an even brighter future,” said John Cahill, Kraft chairman and CEO. “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.”

When the transaction closes, Alex Behring, chairman of Heinz and the managing partner at 3G Capital, will become the chairman of The Kraft Heinz Co. John Cahill, Kraft chairman and CEO, will become vice chairman and chair of a newly formed operations and strategy committee of the Board of Directors. Bernardo Hees, CEO of Heinz, will be appointed CEO of The Kraft Heinz Co. The Kraft Heinz Co. will be co-headquartered in Pittsburgh and the Chicago area.

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.

Press release