NEW YORK (Reuters) – Kraft Foods Group Inc announced it will merge with ketchup maker HJ Heinz Co, owned by the Brazilian firm 3G Capital and Berkshire Hathaway Inc (cluster of Warren Buffett) to form the third-largest food and beverage company in North America.
The combined company, which will be headed by CEO Heinz, Bernardo Hees- revenues have nearly 28,000 billion, the companies said Wednesday in a statement.
Kraft has struggled with weak demand for canned food products in the United States.
It is anticipated that the combined company, to be called Kraft Heinz Co, save about 1,500 million annually in late 2017, the companies said.
Kraft shareholders will own a 49% in the combined company and the shareholders of Heinz, 51%.
Kraft shareholders will receive one share of the combined company and a special cash dividend of $ 16.50 per share for each share held.
At the end of Tuesday, Kraft had a market value of around 36,000 million, based on shares outstanding until March 2.
The Brazilian private equity firm 3G Capital and Berkshire Hathaway bought Heinz by 23,200 million in 2013.
Kraft is the fifth largest agreement 3G Capital in food industry and drinks since 2008, when planned purchase of Anheuser-Busch by InBev brewery.
3G Capital also owns 51% of Restaurant Brands International Inc, formed when your business Burger King bought the Canadian coffee chain Tim Hortons Inc last year.
Berkshire and 3G Capital fund the payment of the special dividend in cash, which will total close to 10,000 million.
Heinz chairman and managing partner of 3G Capital, Alex Behring, will become chairman of the combined company and CEO of Kraft, John Cahill, will be the vice president.
It is expected the deal to close in the second half of 2015.
The Wall Street Journal reported Tuesday that the companies were in talks.
Lazard acted as financial advisor Heinz, while Cravath, Swaine & amp; Moore and Kirkland and Ellis were legal advisors.
Centerview Partners LLC acted as financial advisor to Kraft and Sullivan & amp; Cromwell, his legal adviser.
At 11:45 GMT, shares of Kraft rose 32% to $ 81, before the opening of the US stock market.
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