By Chelsey Dulaney
Kraft Foods Group Inc. and H.J. Heinz Co. have agreed to merge
in a deal that will create the fifth largest food and beverage
company in the world.
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.
The Wall Street Journal reported that the two companies were in
talks on late Tuesday, with a deal likely to top $40 billion.
Under the terms of the deal, Warren Buffett's Berkshire Hathaway
Inc. and private-equity firm 3G Capital will invest $10 billion in
the new company.
In 2013, 3G teamed up with Mr. Buffett to buy U.S. ketchup maker
Heinz for $23 billion.
3G, an acquisitive Brazilian firm known for buying consumer
companies it considers bloated and aggressively slashing costs, has
been looking for targets after it recently raised some $5 billion
for deal making.
Kraft today is a mostly U.S. food conglomerate whose brands
include Oscar Mayer deli meats and Maxwell House coffee in addition
to its namesake cheese products. The company has struggled of late
with changing tastes.
The combined company, which will be called The Kraft Heinz Co.,
will have revenues of $28 billion.
Heinz shareholders will hold a 51% stake in the combined
company, while Kraft shareholders will hold a 49% ownership
stake.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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