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The Kraft Heinz Company: A new brand powerhouse?

Kraft and Heinz will be merging into one giant F&B entity and is set to take on the title of the fifth largest F&B company in the world. The combined entity is to be named The Kraft Heinz Company.

Kraft shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51%.

According to a press statement, the joint entity will have revenues of about US$28 billion, with eight US$1 billion-plus brands and five brands between US$500 million to US$1 billion. Following the merger, there is also an estimated US$1.5 billion in annual cost savings that are to be implemented by the end of 2017.

Alex Behring, chairman of Heinz and the managing partner at investment firm 3G Capital, said bringing together these two iconic companies would create a strong platform for both US and international growth.

“Our combined brands and businesses mean increased scale and relevance both in the US and internationally. We have the utmost respect for the Kraft business and its employees, and greatly look forward to working together as we integrate the two companies,” Behring said. Behring will now be taking on the role of chairman of The Kraft Heinz Company.

Meanwhile, John Cahill, Kraft chairman and chief executive officer, will become vice-chairman and chair of a newly formed operations and strategy committee of the board of directors.

“Together the company will have some of the most respected, recognised and storied brands in the global food industry,” he said.

He added the combination offered significant cash value to shareholders and gives them the opportunity to be investors in a company very well positioned for growth, especially outside the United States, as it brought Kraft’s iconic brands to international markets.

Bernardo Hees, chief executive officer of Heinz, will be appointed chief executive officer of The Kraft Heinz Company. The board of directors of the combined company will consist of five members appointed by the current Kraft board, as well as the current Heinz board, including three members from Berkshire Hathaway and three members from 3G Capital.

Warren Buffett, chairman and CEO of Berkshire Hathaway said: “I am delighted to play a part in bringing these two winning companies and their iconic brands together. This is my kind of transaction, uniting two world-class organisations and delivering shareholder value.”

 

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