Earlier this week, media reports indicated that two food manufacturing giants in the United States would soon merge to create a new entity that is expected to be the third largest food and beverage producing company in the nation. Kraft Foods Group, Inc will combine with H.J. Heinz Co. to form “Kraft Heinz Co.”
The merger occurred with the assistance of Berkshire Hathaway, a company owned by billionaire Warren Buffett, and 3G Capital, an international private equity firm whose creators include Brazillian billionaire Jorge Paul Lemann. Investors will furnish $10 billion in capital to the new entity. Brad Reifler (Reuters.com) has learned that the newly merged food manufacturer is expected to generate revenues approaching $28 billion annually.
Warren Buffet reportedly indicated: “This is my kind of transaction, uniting two world-class organizations and delivering shareholder value.” He added: “I am excited by the opportunities for what this new combined organization will achieve.”
Last year, Kraft suffered a number of business reverses, including a decline in profits. Alex Behring, the Chairman of H. J. Heinz, will become the Chairman of the new firm. Kraft’s Chairman and CEO, John Cahill, will become Vice Chairman of the new company and will head a Board committee dedicated to overseeing operations and strategy.
Kraft Heinz Co. plans to maintain two corporate headquarters: one in Chicago, and the other in Pittsburgh, Pennsylvania. Heinz CEO Bernardo Hees will manage the company’s operations.