H J Heinz Co, Kraft Foods agree to merger

March 25, 2015
H J Heinz Company and Kraft Foods Group Inc have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third-largest food and beverage company in North America.

H J Heinz Company and Kraft Foods Group Inc (NASDAQ: KRFT) have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third-largest food and beverage company in North America with a large portfolio of iconic brands.
Under 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 about $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital.
The combination of these iconic food companies joins two portfolios of brands including Heinz, Kraft, Oscar Mayer, Ore-Ida, and Philadelphia. Together the new company will have eight $1-billion-plus brands and five brands between $500 million and $1 billion.
When the transaction closes, Alex Behring, chairman of Heinz and the managing partner at 3G Capital, will become chairman of The Kraft Heinz Co. John Cahill, Kraft chairman and chief executive officer, will become vice-chairman and chairman 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 board of directors of the combined company will consist of five members appointed by the current Kraft board, as well as the current Heinz board, including three members from Berkshire Hathaway and three from 3G Capital.
The Kraft Heinz Co will be co-headquartered in Pittsburgh PA and the Chicago IL area.
This transaction is subject to approval by Kraft shareholders, receipt of regulatory approvals, and other customary closing conditions. It is expected to close in the second half of 2015.

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