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Heinz And Kraft Merger

11 October 2015 |

On the 2 July 2015, H.J. Heinz completed its merger with Kraft Foods Group. This was a transaction that was orchestrated by none other than 'The Sage of Omaha', Warren Buffet (The Warren Buffet Way) and global investment firm 3G Capital. The transaction will create a combined company, which will trade under the name 'The Kraft Heinz Company'.

Kraft shareholders will receive a cash dividend of $16.50 per share and stock in The Kraft Heinz Company representing 49% of total equity. The other 51% of equity will be owned by Warren Buffet's Berkshire Hathaway and 3G Capital; these parties will invest $10 billion in the transaction. The press release made by H.J. Heinz predicts that the new company will have revenues of approximately $28 billion. The merger will produce the third largest food and beverage company in North America, and the fifth largest in the world.

The merger gives the combined company the opportunity to leverage the benefits of the many brand names Kraft possesses (such as Lunchables, Cool-Whip, Kool-Aid and Jell-O) and the international recognition of H.J. Heinz. It is also expected that the majority influence of Berkshire Hathaway and 3G Capital will lead to significant cost cutting, which normally involves jobs being slashed. This is likely to further boost the profitability of the new entity.

Lazard Ltd served as financial advisor to H.J. Heinz. Cravath, Swaine & Moore and Kirkland & Ellis served as legal advisors to H.J. Heinz.

Centreview Partners served as financial advisor to Kraft. Sullivan & Cromwell acted as legal advisors to Kraft.