Kraft, Heinz pledge marketing boost with merger

The combined entity will own eight $1 billion brands.

PITTSBURGH: Food giant Kraft Foods is planning to merge with ketchup maker HJ Heinz to create the fifth-biggest food and drinks company in the world.

The combined company will be called The Kraft Heinz Company and will have revenue of about $28 billion.

The new entity will own eight $1 billion brands, including Kraft’s Oscar Mayer and the $4 billion Heinz ketchup brand. There are five more brands with $500 million to $1 billion in revenue, including Kraft’s Philadelphia and Capri Sun.

 Kraft shareholders will own 49% of the company, with the remainder held by Heinz, which is owned by 3G Capital and Warren Buffett’s Berkshire Hathaway.

More marketing spend
The two companies indicated the merger will boost Kraft Foods’ presence overseas in a statement. The companies also said the merger will result in more spending on marketing and innovation in a statement.

The company bought Cadbury in an aggressive takeover in 2010 in an attempt to grow its global footprint. Eventually, the confectionary arm of Kraft, including Cadbury, was spun into a separate company, Mondelez.

"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," Kraft CEO John Cahill said in a statement. "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 US, as we bring Kraft’s iconic brands to international markets."

If approved by Kraft’s shareholders and regulators, the deal is expected to close by the end of this year. 

This story originally appeared on Marketing.

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