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Sonal in Smart Investing & Retirement Plans,

Kraft shares soar more than 40%

The deal was engineered by Heinz's owners, the Brazilian investment firm 3G Capital, and billionaire investor Warren Buffett's Berkshire Hathaway.

Current Heinz shareholders will own 51% of the combined company with Kraft (NASDAQ:KRFT) shareholders owning a 49% stake.

3G and Berkshire Hathaway bought Heinz two years ago for $23bn and took the company private in 2013.

Warren Buffett, Berkshire Hathaway chief executive, 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. I'm excited by the opportunities for what this new combined organisation will achieve."

The combined firm, Kraft Heinz Company, expects to make $1.5bn (£1bn) cost savings per year by the end of 2017. Its brands will include Kraft, Heinz, and hotdog maker Oscar Mayer, with combined sales worth some $29bn.

Alex Behring, chairman of Heinz and the managing partner at 3G Capital, said: 

"By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth."

John Cahill, Kraft chairman and chief executive said:

"We look forward to uniting with Heinz in what will be an exciting new chapter ahead."

The men behind the Kraft deal

Jorge Paulo Lemann

  • Ranked as Brazil's richest man by Forbes
  • Competed in the singles tennis Wimbledon Championships in 1962
  • Co-founded global investment firm 3G Capital in 2004
  • Owns controlling stake in Anheuser-Busch InBev and Burger King

Warren Buffett

  • Ranked as one of the world's richest men by Forbes
  • Chairman and chief executive of holding company Berkshire Hathaway
  • Owns companies ranging from car insurance to jewellery
  • Joined forces with 3G to buy Heinz in 2013