New York--For fans of traditional American gastronomy, it's a Wall Street match made in food heaven.
The mega-merger of US icons Heinz and Kraft Foods announced Wednesday will bring together classic staples ketchup, hot dogs, processed cheese and a whole host of other top-selling convenience foods under one roof.
The deal, forged by investment guru Warren Buffett's Berkshire Hathaway and 3G Capital, which own Heinz, will assemble the world's fifth-largest food company, with around $28 billion in annual sales.
The Kraft Heinz Company, as it will be called, will have eight billion-dollar brands and five others worth more than $500 million in annual sales.
They include classic brands with often global name-recognition: Heinz Ketchup, Heinz Baked Beans, Kraft Macaroni & Cheese, Maxwell House coffee, Velveeta cheese, Oscar Mayer hotdogs, A-1 steak sauce, Miracle Whip mayonnaise, Kool-Aid and Jell-O.
The deal also amplifies 3G's powerful place in the global food industry, putting the new company side by side with two other giants the Brazilian investment house controls: Burger King -- and its newly absorbed subsidiary, the Tim Hortons chain -- and AB InBev, the world's largest beer company, owner of another iconic American brand, Budweiser.
"By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth," said Alex Behring, chairman of Heinz and the managing partner at 3G Capital.
Berkshire and 3G, which bought Heinz for $23 billion two years ago and took it private, will have a 51 percent stake in the combined firm, with a 49 percent stake to be held by Kraft's existing shareholders.
Berkshire and 3G will invest an additional $10 billion in the deal to pay for a special cash dividend of $16.50 per share for Kraft shareholders.
The dividend represents a 27 percent premium to Kraft's closing price Tuesday. The deal has been unanimously approved by the companies' boards of directors.
"This is my kind of transaction, uniting two world-class organizations and delivering shareholder value," Buffett said in a statement. The chairman and chief executive of Berkshire Hathaway is considered one of the world's savviest investors.
AFP
