In a deal backed by 3G Capital and Berkshire Hathaway, H.J. Heinz Company and Kraft Foods Group (NASDAQ: KRFT) have announced a merger agreement to create The Kraft Heinz Company, forming the third largest food & beverage company in North America. 3G and Berkshire, which already own Heinz, will claim 51% of the new entity, with Kraft shareholders owning the remaining stake. Kraft shareholders will also receive a special cash dividend of $16.50 per share; the $10 billion dividend will be funded by equity contributions from 3G and Berkshire, as no additional debt is expected to be added to The Kraft Heinz Company. Once the deal closes (expected in 2H), the combined company is expected to generate revenues of about $28 billion, with eight $1 billion+ brands and five others worth over $500 million apiece.
No stranger to mega-deals, 3G initially partnered with Berkshire to purchase Heinz in a public-to-private buyout in June 2013, a transaction that valued the company at approximately $28 billion when including debt. More recently the firm completed the combination of restaurant chains Burger King and Tim Hortons—first acquiring BK in a $4 billion deal and subsequently adding Tim Hortons in a C$12.5 billion take-private acquisition.
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