Kraft shares jump 30 per cent as Warren Buffett and 3G Capital confirm plans to merge it with Heinz in $40bn takeover

 
Emma Haslett
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Buffett said the deal will bring "two winning companies and their iconic brands together" (Source: Corbis)

Ketchup and cheese single sandwich, anyone? Warren Buffett has confirmed plans to merge processed cheese maker Kraft with Heinz, creating the Kraft Heinz Company, pushing shares in the company up more than 30 per cent in after-hours trading.

Last night it was rumoured Brazilian private equity giant 3G Capital, which joint-owns Heinz with Buffett's Berkshire Hathaway, had been sniffing around Kraft.

The pair could pay as much as $40bn (£27bn) for the company, which makes everything from Philadelphia to Kool-Aid to Oscar Mayer hot dogs - and, of course, Kraft cheese singles.

Under the terms of the deal, Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. After it's completed, they'll own a 49 per cent stake in the combined company, while current Heinz shareholders will own 51 per cent on a fully diluted basis.

This morning Buffett said the deal will bring "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 drew ire in the UK after its hostile takeover of Cadbury in 2009. Following the buyout, it spun the company out into snacks giant Mondelez, which also encompassed Toblerone, Oreo and Kenco coffee.

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