H.J. Heinz Co. and Kraft Foods Group said they are merging to create the world's fifth-biggest food and beverage company.
The new company will be called The Kraft Heinz Co. and will be co-headquartered in Pittsburgh and the Chicago area, the companies said in a statement. The new company will have revenues of approximately $28 billion.
Kraft shareholders would receive a special cash dividend of $16.50 per share, and stock representing a 49 percent of the new company. Existing Heinz shareholders will own 51 percent, the statement said.
Warren Buffett's Berkshire Hathaway and 3G Capital, a Brazilian private equity firm, will invest $10 billion to fund the special dividend.
Buffett and 3G spent $23 billion to buy Heinz in 2013.
The announced merger brings together under one corporate roof iconic brands such as Heinz, Kraft, Oscar Mayer and Philadelphia.
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The Wall Street Journal, which first reported on the merger, adds: "The deal comes as many major U.S. food makers struggle with changes in consumer tastes that have hampered their ability to sell packaged, processed food."
"By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth," Alex Behring, chairman of Heinz and managing partner at 3G Capital, said in the statement.
Buffett, Berkshire Hathaway's CEO, added: "This is my kind of transaction, uniting two world-class organizations and delivering shareholder value."
Kraft Chairman and CEO John Cahill added: "This combination offers significant cash value to our shareholders and the opportunity to be investors in a company very well positioned for growth, especially outside the United States, as we bring Kraft's iconic brands to international markets."
The statement added that Behring will become chairman of combined company when the deal closes. Cahill will be vice chairman. Heinz CEO Bernardo Hees will be the new firm's CEO. Copyright 2019 NPR. To see more, visit https://www.npr.org.