Heinz just bought Kraft Foods
Ketchup marriage: Buffett couples Heinz and Kraft
New York / Northfield - The US food companies Heinz and Kraft merge. Behind the deal are star investor Warren Buffett and Brazilian financial investor 3G. The merged company should be called The Kraft Heinz Company, announced the two companies on Wednesday.
The new multi is expected to generate sales of around 28 billion dollars (25.6 billion euros), making it the third largest food and beverage company in North America and number five worldwide.
Buffett and the Burger King owner 3G, who also owns the ketchup king Heinz, will hold 51 percent of the new food company. The shareholders of the listed Kraft Foods Group will receive the remaining shares and additionally receive a special dividend of ten billion dollars; this is raised by Buffett's investment firm Berkshire Hathaway and the Brazilians.
The market value of the Kraft Foods Group was measured against the New York share price on Tuesday at a good 36 billion dollars. Buffett and 3G paid $ 23 billion for Heinz two years ago. "This is a business to my liking," Buffett said, according to a statement. However, the Kraft shareholders and the competition watchdogs still have to agree. If all goes well, the merger should be completed in the second half of the year.
3G is already a heavyweight in the US food market and has been gearing up for bigger business for quite some time. In November, the private equity company announced that it would launch a fourth fund for "special investments". Insiders said earlier this year that this pot should be worth five billion dollars.
Kraft recently posted sluggish sales
Buffett had recently suggested in his widely acclaimed letter to Berkshire shareholders that he would team up with the Brazilians on more investments. That had sparked speculation as to what goal the partners might set themselves next. In addition to Kraft Foods, the ailing breakfast cereal manufacturer Kellogg's and Milka manufacturer Mondelez were also in discussion. Mondelez and the Kraft Foods Group were a group until 2012, but then went their separate ways. The smaller Kraft Foods Group has since concentrated on the US grocery business, while the larger Mondelez took over the international business and snacks.
Buffett knows his way around the food market: he traditionally puts his money and that of his shareholders in consumer stocks, making him one of the largest shareholders in Coca-Cola. Buffett was the largest shareholder in the former Kraft Group for a long time.
In 2014, the Kraft Foods Group struggled with sluggish sales and falling profits. In December, ex-CEO Tony Vernon gave up his leadership position and was succeeded by Chairman of the Board of Directors John Cahill. (APA, March 25, 2015)
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