Kraft, Heinz to merge

H.J. Heinz Company and Kraft Foods Group, Inc. will merge to create The Kraft Heinz Company. With revenues of approximately $28 billion with eight $1+ billion brands and five brands between $500 million and $1 billion, the Kraft Heinz becomes North America’s third largest food & beverage company, and fifth in the world.

The Boards of Directors of these companies agreed on conditions that 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 approximately $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital.

The merger creates substantial value for Kraft shareholders. The special cash dividend payment represents 27% of Kraft's closing price as of March 24, 2015. Also, by continuing to own shares of the new combined company, Kraft shareholders will have the opportunity to participate in the new company's long-term value creation potential.

The union of two major companies brings together many of the industry’s iconic brands, namely Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia. The complementary nature of the two brand portfolios presents substantial opportunity for synergies, which will result in increased investments in marketing and innovation.

Kraft Heinz will be based in Pittsburgh and the Chicago area in the United States.