Major news in the business world broke today as Kraft Foods and Heinz have announced they will merge into Kraft Heinz Company, becoming the United States' 3rd largest food and beverage company. Shareholders of Heinz's parent company, Brazilian corporation 3G and Berkshire Hathaway will own 51% of the new company, with Kraft shareholders being allotted 49%.
The move is expected to not only give Kraft shareholders a nice dividend ($16.50/share) backed by 3G & Berkshire Hathaway, but also expected to make an annual cost savings of $1.5 billion by the end of 2017. The company's brands will remain intact such as Kraft, Heinz, and Oscar Meyer which combined total $29 billion in annual sales.
Kraft Heinz will need to capitalize on the merger by updating their packaging and model to a more modern approach some experts say while minimizing costs. Kraft's adventures in the last 5 years have been rather mixed, including the purchase of UK chocolate giant Cadbury before spinning it off as a part of it's global snack brand Mondelez, which now also includes Oreo and Trident. The company does expect job losses to occur with the merger, and many experts believe it has a lot to do to meet the $1.5 billion cost savings goal for 2017 while trying to out compete main rival brand Nestle, which is currently one of the top three food and beverage companies in the US (along with Pepsico and Coca-Cola).