US based Ketchup maker Heinz has signed a definitive merger agreement with Kraft Foods to form a new company, Kraft Heinz, to become the third largest food and beverage firm in North America and potentially fifth largest in the world.
Earlier, there were media reports of Brazilian private equity firm 3G Capital Partners, owner of Heinz, being involved in talks to acquire the American food company in a deal potentially valued at more than $40bn.
However, the companies didn't disclose a value for the deal.
The combined company will have revenue of about $28bn with 13 brands including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia, among others.
3G Capital managing partner and Heinz chairman Alex Behring said:"By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth.
"Our combined brands and businesses mean increased scale and relevance both in the U.S. and internationally."
As part of this development, Heinz shareholders will collectively own 51% of the new company. Kraft shareholders will receive a special cash dividend of $16.50 per share upon closing and stock in Kraft Heinz, representing a 49% stake.
In addition, Berkshire Hathaway and 3G Capital will invest an additional $10bn in the new company.
The new company will be co-headquartered in Pittsburgh and the Chicago area.
