H.J. Heinz and Kraft sign merger agreement

PITTSBURGH and NORTHFIELD, Ill.—H.J. Heinz Company and Kraft Foods Group, Inc. have announced they have entered into a definitive merger agreement to create The Kraft Heinz Company, forming the third-largest food and beverage company in North America, and the fifth-largest food and beverage company in the world, with an unparalleled portfolio of iconic brands.

Under the terms of the agreement, which has been unanimously approved by both Heinz and Kraft’s Boards of Directors, Kraft shareholders will own a 49 percent stake in the combined company, and current Heinz shareholders will own 51 percent on a fully diluted basis.

Global Brand Portfolio Powerhouse
The combination of these iconic food companies joins together two portfolios of beloved brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia.

The new company will have revenues of approximately $28 billion with eight $1+ billion brands and five brands between $500 million-$1 billion.

The complementary nature of the two brand portfolios presents substantial opportunity for synergies, which will result in increased investments in marketing and innovation.

Alex Behring, chairman of Heinz and the managing partner at 3G Capital says, “By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth. Our combined brands and businesses mean increased scale and relevance both in the U.S. and internationally. We have the utmost respect for the Kraft business and its employees, and greatly look forward to working together as we integrate the two companies.”

Warren Buffett, chairman and chief executive officer of Berkshire Hathaway adds: “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 organizations and delivering shareholder value. I’m excited by the opportunities for what this new combined organization will achieve.”

Kraft chairman and chief executive officer John Cahill states, “Together we will have some of the most respected, recognized and storied brands in the global food industry, and together we will create an even brighter future.

“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.”

Adds Heinz chief executive officer Bernardo Hees: “We are thrilled about the unique opportunities this merger will create for our consumers worldwide, as well as our employees and business partners. Together, Heinz and Kraft will be able to achieve rapid expansion while delivering the quality, brands and products that our consumers love.

“Over the past two years, we have transformed Heinz into one of the most efficient and profitable food companies in the world while reinvesting behind our key brands and continuing our relentless commitment to quality and innovation.”

When the transaction closes, 3G Capital managing partner and Heinz chairman Alex Behring will become the chairman of The Kraft Heinz Company.

John Cahill, Kraft chairman and CEO, will become vice-chairman and chair of a newly formed operations and strategy committee of the Board of Directors.

Heinz CEO Bernardo Hees will be appointed chief executive officer of The Kraft Heinz Company. The new executive team for the combined global company will be announced during the transition period, but no later than transaction closing.

The Board of Directors of the combined company will consist of five members appointed by the current Kraft Board, as well as the current Heinz Board, including three members from Berkshire Hathaway and three members from 3G Capital.

Berkshire Hathaway and 3G Capital have a history of successful partnerships and are committed to long-term ownership of The Kraft Heinz Company as it strengthens its leadership position in the industry.

The Kraft Heinz Company will be co-headquartered in Pittsburgh and the Chicago area.

The transaction is subject to approval by Kraft shareholders, receipt of regulatory approvals and other customary closing conditions and is expected to close in the second half of 2015.

ABOUT HEINZ

H.J. Heinz Company, offering “Good Food Every Day”™ is one of the world’s leading marketers and producers of healthy, convenient and affordable foods specializing in ketchup, sauces, meals, soups, snacks and infant nutrition. Heinz provides superior quality, taste and nutrition for all eating occasions whether in the home, restaurants, the office or “on-the-go.” Heinz is a global family of leading branded products, including Heinz Ketchup, sauces, soups, beans, pasta and infant foods (representing over one third of Heinz’s total sales), Ore-Ida potato products, Weight Watchers Smart Ones entrees, T.G.I. Friday’s snacks, and Plasmon infant nutrition. Heinz is famous for its iconic brands on six continents, showcased by Heinz Ketchup, The World’s Favorite Ketchup.

ABOUT KRAFT FOODS GROUP

Kraft Foods Group, Inc. is one of North America’s largest consumer packaged food and beverage companies, with annual revenues of more than $18 billion. The company’s iconic brands include Kraft, Capri Sun, Jell-O, Kool-Aid, Lunchables, Maxwell House, Oscar Mayer, Philadelphia, Planters and Velveeta. Kraft’s 22,000 employees in the U.S. and Canada have a passion for making the foods and beverages people love.
For more information about Kraft, visit www.kraftfoodsgroup.com.