Kraft and Heinz Agree to Merge

H.J. Heinz Company/Kraft Foods Group, Inc.(NEW YORK) — H.J. Heinz is expected to buy Kraft Foods Group, creating what the companies say would be the third-largest food and beverage company in North America.

The merger deal, announced Wednesday by both companies, was engineered by Heinz’s owner, the Brazilian investment firm 3G Capital, and billionaire investor Warren Buffett’s Berkshire Hathaway, which shares ownership of Heinz.

3G has a big appetite for food brands, previously gobbling up Burger King in 2010, and the Canadian restaurant chain Tim Hortons last year.

The combination of these iconic food companies joins together two portfolios of beloved brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia.

But these are challenging times for packaged food companies. Because of changing consumer tastes, many well-known food brands are struggling with declining sales. Kraft’s profit last year fell more than 60 percent.

3G has won praise on Wall Street for deal-making and competent management as well as cost-cutting.

Both Heinz and Kraft’s boards of directors have unanimously approved the terms of the agreement but it still needs to be approved by Kraft shareholders. The transaction is expected to close in the second half of the year.

Follow @ABCNewsRadio
Copyright © 2015, ABC Radio. All rights reserved.