Before now, they were only ever combined in a bowl of KD.
But two brands we’ve known and loved since we were kids will soon merge to become one of the largest food service companies in the world.
H.J. Heinz Co. is buying Kraft Foods Group Inc. in a deal engineered by Heinz’s owners, the Brazilian investment firm 3G Capital (the firm behind Burger King’s takeover of Tim Horton’s last year), and billionaire investor Warren Buffett’s Berkshire Hathaway.
The pre-existing companies will invest another $10 billion USD into the company.
The deal will make it the third largest food and beverage company in North America, with annual revenue of $28 billion USD. The combined company’s brands will include Kraft, Heinz, and Oscar Mayer.
The combined company is expected to save about $1.5 billion annually by the end of 2017.
For current shareholders, Heinz shareholders will own 51 per cent of the merged company, and Kraft shareholders will own a 49 per cent stake. Kraft shareholders will receive a special cash dividend of approximately $10 billion, or $16.50 per share.
As expected, shares of Kraft are currently soaring today.
As for Heinz, the deal will mark a return of the company to the public market after going private in 2013.
Heinz CEO Bernardo Hees will become CEO of the combined company; Alex Behring, Heinz chairman and managing partner at 3G Capital, will be chairman; and Kraft CEO and Chairman John Cahill will become vice chairman.
As many people seem to be moving away from processed food, there’s still a steady demand for it – at least Warren Buffet seems to think so. Apparently, there are four new products in the works.
So, what can we expect? Kraft Dinner flavoured ketchup?
Ketchup flavoured Kraft Dinner?
We’ll have to wait and see; the deal is expected to close in the second half of 2015.