H. J. Heinz and Kraft Food Group announced today a merger led by 3G Capital of Brazil and Warren Buffet’s Berkshire Hathaway. Among the benefits expected from the combined entities are to grow the market for Kraft brands outside the U.S., which could mean extending brands and packages familiar to U.S. consumers to new markets, and annual cost savings of $1.5 billion to be achieved by 2017.
The merger will create the third largest food and beverage company in the U.S. and the fifth largest worldwide. The new company will be named The Kraft Heinz Company and be co-headquartered in Pittsburgh and the Chicago area.
The combination creates a company with eight $1billion brands. The official news release points to increased investments in marketing and innovation due to the “complementary nature of the two brand portfolios…”
“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,” said John Cahill, Kraft Chairman and Chief Executive Officer, in the official news release issued today. “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.”