Heinz, Kraft to merge, create world’s 5th largest food company

H.J. Heinz and Kraft Foods Group on Wednesday announced plans to merge and form the fifth biggest food and beverage company globally and the third largest in North America.

The combined entity, which will be known as The Kraft Heinz Company, will have annual revenue of roughly $28 billion and be coheadquartered in Pittsburgh and the Chicago area, the food giants said in a news release.

Under the terms of the deal, which has already been approved by both companies’ boards of directors, Heinz’s existing shareholders will collectively own 51 percent of the new company, while Kraft’s shareholders will hold the remaining 49 percent stake.

Kraft’s existing shareholders will receive a special cash dividend of $16.50 a share to be funded by an equity contribution by multibillionaire investor Warren Buffett’s Berkshire Hathaway and Brazilian investment firm 3G Capital, which jointly acquired Heinz in 2013 for around $28 billion.

The proposed merger, which is expected to close in the second half of 2015, will bring together iconic brands such as Heinz, Oscar Mayer and Kraft. That portfolio includes eight brands with annual revenue of more than $1 billion and five brands with annual revenue of between $500 million and $1 billion.

3G Capital also owns Burger King, which it acquired in 2010, and controls the world’s largest brewer, InBev, the maker of brands such as Budweiser and Stella Artois.