HJ Heinz Buying Kraft In Deal That Will Create One Huge Food Giant

Usually when two parties walk down that aisle and say “I do” in front of everyone, there are a few whispers from those assembled wondering when the twosome will settle down and start making children. In the case of Heinz and Kraft, everyone already knows what their union will produce — a giant food company baby.

If you’ve been putting ketchup on your macaroni and cheese (without shards of metal, let’s hope), you probably saw this merger coming a long way off: H.J. Heinz Co. is buying Kraft Foods Group, which will create what the companies say is going to be the third-largest food and beverage company in North America, reports the Chicago Tribune, with annual revenue of about $28 billion.

It’ll be a split living arrangement, with Kraft Heinz keeping headquarters in both Pittsburgh, where Heinz hails from, and also in the Chicago area, home to Kraft, notes the Associated Press.

The two companies have become household names in the more than 100 years that both have existed, with brands like Oscar Mayer, Ore-Ida, Jell-O and of course Kraft and Heinz included in the roster of familiar names that will now all be part of the same family.

Kraft shareholders will get stock in the new company and a special cash dividend of about $10 billion, or about $16.50. Each share of Kraft will turn into one share of Kraft Heinz.

Heinz shareholders will own 51% of the new company, with Kraft shareholders hanging onto the other 49% stake.

“This is my kind of transaction,” said Warren Buffett of Berkshire Hathaway, one of the engineers of the union (his company and investment firm 3G capital bought Heinz two years ago). “Uniting two world-class organizations and delivering shareholder value. I’m excited by the opportunities for what this new combined organization will achieve.”

The union still needs a final blessing from federal regulators as well as shareholders of Kraft Foods Group, but both companies’ boards have already given the go-ahead unanimously.

HJ Heinz buying Kraft in deal to create food giant [Chicago Tribune]
Heinz buying Northfield-based Kraft and building a $28 billion food giant [Associated Press]