Kraft & Heinz: Mega Merger

Kraft (KRFT) and Heinz (HNZ) have announced an merger agreement that will result in the third largest food and beverage company, with sales of about $28 billion. When its was announced earlier today Kraft stock surged more then 33%. The brains behind this merger was Warren Buffett and 3G Capital who in 2013 bought together Heinz (HNZ). This will make the second time that Buffett did a really big deal with the private equity firm 3G Capital. Warren Buffett's Berkshire Hathaway also help 3G Capital finance Burger King's purchase of Canadian chain Tim Horton last year.

Detail of The Merger 

Under the term of agreement, the shareholders of Kraft will own 49% of the combined company. Kraft  will receive stock in the combined company and a special dividend of $16.50 per share. Heinz shareholders will owns the other 51% of the combined company. Berkshire Hathaway and 3G Capital will fund the total special dividend payment of $10 billion.

The Kraft Heinz Company

The combined company will be named Kraft Heinz Company. Kraft Heinz Company will have eight $1 billion plus brands and five brands between $500 million and $1 billion. It portfolio of brands will include Heinz, Kraft, Oscar Meyer, Ore-Ida, and Philadelphia. The new combined company is committed to maintaining an investment grade rating and intends to maintains Kraft's dividend and enlarge its overtime.

Kraft Chairman and CEO John Cahill said on the merger, "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. We look forward to uniting with Heinz in what will be an exciting new chapter ahead.”

Warren Buffett Interview About The Merger
Warren Buffett on Wednesday did an phone interview with CNBC about the Kraft and Heinz merger. He discuss why he did its with a private of equity firm like 3G Capital and how the firm was different from other private equity firms. 

Part 1

Part 2

Part 3

Part 4