Kraft shareholders to vote on H.J. Heinz acquisition

By Jenny Eagle contact

- Last updated on GMT

Kraft shareholders to vote on H.J. Heinz acquisition

Related tags: Kraft foods

Kraft shareholders will vote on a proposed acquisition of Kraft Foods Group by H.J. Heinz following a waiting period set by the Hart-Scott-Rodino (HSR) Act, which has now expired.

The waiting period allowed the Federal Trade Commission and the Department of Justice to get information about the transaction before it happens.

‘Kraft Heinz Company’

If the proposed merger goes ahead, the ‘Kraft Heinz Company’ will form the third largest food and beverage company in North America behind PepsiCo and Nestlé and Kraft Heinz will trade as KHC.

It will have its headquarters in Pittsburgh and the Chicago area, with Bernardo Hees, CEO, Heinz remaining at the helm.

Nicholas Mockett, head of Packaging M&A (mergers and acquisition) at Moorgate Capital advisory firm in London told FoodProductionDaily the waiting time refers to a piece of US legislation which governs US takeovers and says that a deal cannot close until certain authorities have had a period (ordinarily 30 days) to consider whether it is anti-competitive.

That is one hurdle which the proposed deal has cleared but there are other conditions which it must fulfil prior to completing​,” he said.

There are ordinarily conditions in the agreement between parties which have to be met and this deal is also subject to competition clearance outside the US (Canada) and requires final shareholder approval by way of a vote on July 1​.”  

Under the terms of the agreement, Kraft shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51% on a fully diluted basis. Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share.

The expiration of the HSR Act waiting period satisfies one of the conditions to the closing of the proposed transaction, which remains subject to approval by Kraft shareholders, antitrust clearance in Canada and other customary closing conditions.

Little overlap in the companies' products

News of the merger, by 3G Capital and Warren Buffett’s Berkshire Hathaway was announced in March this year.

Analysts said at the time, the deal was unlikely to face antitrust hurdles because there was little overlap in the companies' products; Kraft sells cheese, Oscar Mayer meats, packaged meals and Maxwell House coffee, while Heinz makes ketchup, sauces and frozen foods.

Alex Behring, chairman of Heinz and managing partner at 3G Capital, will become chairman of the new company after the deal closes, which is expected to happen in the second half of 2015.

John Cahill, chairman/CEO, Kraft will become vice chairman and run an operations and strategy committee on the board.

A new executive team for the combined global company will be announced during the transition period.

Related topics: Processing & Packaging

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