Kids have been putting ketchup on their Kraft Dinner for decades, so maybe this was inevitable.
The H.J. Heinz Company has bought Kraft Foods Group (NASDAQ:KRFT) in a massive (US$40 billion) deal that will see the two companies form The Kraft Heinz Company, which will be the third-largest food and beverage company on the continent and the fifth-largest in the world.
In addition, 3G Capital and Berkshire Hathaway are investing US$10 billion in the new company. 3G Capital is the company behind the controversial $12.8 billion merger of Burger King with Canada’s Tim Hortons.
The newly formed entity, which will be co-headquartered in Pittsburgh and Chicago is expected to have annual revenue of US$28 billion.
Warren Buffett, chairman and CEO of Berkshire Hathaway, said he is “delighted” to be bringing the “iconic brands” of Kraft and Heinz together.
“This is my kind of transaction, uniting two world-class organizations and delivering shareholder value,” Buffett said.
The deal is a stock-and-cash transaction. Kraft shareholders will get a special dividend of $16.50 per share and stock in Kraft Heinz that will represent 49% of the new company. Heinz shareholders will own 51%.
As of press time, shares of Kraft were trading at $81 – up 32%.
