Heinz buying Kraft Foods in massive deal with company behind Tim Hortons merger
From the Toronto Star
H.J. Heinz Co. is buying Kraft Foods, creating one of the largest food and beverage companies in the world with annual revenue of about US$28 billion. The Kraft Heinz Co. will own brands such as Kraft, Heinz, Oscar Mayer, Ore-Ida and other brands. Eight of those brands have annual sales of US$1 billion or more and five others log sales between US$500 million and US$1 billion every year.
The deal to bring together the two companies, each more than a century old, was engineered by Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital. The two will invest another US$10 billion in the new company. 3G Capital is the company behind the takeover of Tim Hortons by Burger King last year.
Kraft Heinz will maintain headquarters in Pittsburgh, where Heinz is based, and also in the Chicago area, where Kraft resides.
Kraft shares gained $21.06 or 34 per cent to US$82.50 in premarket trade after the announcement. The stock closed Tuesday at US$61.33. Annual cost savings estimated to be $1.5 billion are expected to be booked by the end of 2017.