H.J. Heinz and Kraft Foods Group, the two well-known producers of packaged food, will merge into the fifth-largest food company in the world. The deal is orchestrated by legendary investor Warren Buffett, who has a good nose for the right business decision. The new giant Kraft Heinz will be established as a result of the massive merger. So Warren Buffett, through his Berkshire Hathaway, linked with Heinz operator 3G Capital to seal the deal with a combined injection of $10 billion in capital. This idea rests on such principles as cutting costs, growing internationally, and evolving into a more consumer-focused company. Heinz is a worldwide popular ketchup maker. Kraft Foods is mainly focused on tinned meat production under the Oscar Mayer brand. The deal comes as the major food makers struggle with changes in consumer tastes that have hampered their ability to sell packaged and processed food. Besides, analysts are certain that the combined company is a lucrative solution. They expect the annual revenues of the newly-formed Kraft Heinz to equal almost $28 billion. According to the accord, Kraft shareholders will receive a special dividend of $16.50 a share. Moreover, they will hold a 49% ownership stake in the merger. Heinz shareholders will get a 51% stake in the combined company respectively. “This is my kind of transaction, uniting two world-class organizations and delivering shareholder value,” Berkshire Hathaway chairman and CEO Warren Buffett said in a statement. “I’m excited by the opportunities for what this new combined organization will achieve.” Few years ago, Mr. Buffett bought half of the common stock of the US ketchup maker for $4.25 billion. Besides, he invested $8 billion in preference shares bringing him 9% of annual dividends.
