Kraft (NASDAQ:KRAFT) Surges on News of Merger With Heinz

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By Jacob Maslow

Kraft Mac and CheeseAfter a recent recall by Kraft, investors have been weary to invest further into the company’s stock. Kraft Foods Group Inc. (NASDAQ:KRFT) has announced that they are merging with H.J. Heinz Co. (NYSE:HNZ). The merger has skyrocketed the company’s stock, with the stock rising 37% by early-afternoon trading on Wednesday.

The merger will have Kraft shareholders owning a 49% stake in the company and Heinz stockholders owning a controlling share of 51%.

Kraft shareholders will receive a cash dividend of $16.50 per share. Berkshire Hathaway Inc. (NYSE:BRA.A) and 3G Capital will fund the contribution that is valued at $10 billion. When the deal is finalized, Berkshire Hathaway will own a $9.5 billion dollar stake in the company. Currently, H.J. Heinz is owned by Berkshire Hathaway and 3G Capital.

The merger of the companies will result in it being the fifth-largest food and beverage company in the world.  Berkshire Hathaway’s Warren Buffett has stated that this is his kind of deal. He is excited to bring together two world-class companies.

The new company will have revenues of $28 billion. The new company will be called the H.J. Heinz-Kraft Foods Company. The current Chief Executive of Heinz, Bernardo Hees, will head the new company.

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