H.J. Heinz Company and Kraft Foods Group, Inc. have entered into a definitive merger agreement to create The Kraft Heinz Company. The Kraft Heinz merger will results in the third-largest food and beverage company in North America and the fifth-largest in the world. Under the terms of the agreement, Kraft shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51%. The 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.
The Kraft Heinz Company will locate its headquarters in Pittsburgh and the Chicago area and will have revenues of approximately $28 billion. The merger joins two portfolios of iconic brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida, and Philadelphia. Among these brands are eight that are worth $1 billion-plus and five between $500 million and $1 billion. According to a press release on the merger, because the two brand portfolios are complementary in nature, there is a substantial opportunity for synergies, This will include increased investments in marketing and innovation.
At the close of the transaction, Heinz Chairman and 3G Capital Managing Partner Alex Behring will become the Chairman of The Kraft Heinz Company. 3G Capital acquired Heinz in 2013 along with investment firm Berkshire Hathaway. Kraft Chairman and CEO John Cahill will become Vice Chairman and chair of the Board of Directors' new Operations and Strategy committee. Bernardo Hees, CEO of Heinz, will act as the CEO of The Kraft Heinz Company. The new executive team for the combined global company will be announced during the transition period, but no later than transaction closing.
Members of The Kraft Heinz Company Board of Directors will include five individuals appointed by the current Kraft board, the current Heinz board, including three members from Berkshire Hathaway, and three members from 3G Capital. PW
