30 Mar / Heinz, Kraft to create world’s No. 5 food company
In a jolt touching pantries across the globe, H.J. Heinz and Kraft Foods Group (KRFT) will merge into the world’s fifth-largest food and beverage company — bent on cutting costs, growing internationally and evolving into a more consumer-focused company.
The massive merger, valued at about $36 billion, will allow Kraft “to move and grow faster than we could on our own,” Kraft CEO John Cahill said. He would become vice-chairman of the newly-formed Kraft Heinz.
The news propelled Kraft shares nearly 36% — or $21 .83 per share — Wednesday to close at $83.15.
It’s a bid “to create a Nestle of the USA,” Nomura equity analyst David Hayes said. Others called it a New Era mega-deal that mixes sugar and spice — the sugar being the recent M&A popularity of food and beverage makers; and the spice being that Warren Buffett, through his Berkshire Hathaway, linked with Heinz operator 3G Capital to seal the deal with a combined injection of $10 billion in capital.
The companies had been unanimously approved by their boards of directors. The new firm will be headquartered in Pittsburgh, home of Heinz, and in the Chicago area (Kraft). There are no plans to close either operation.