Kraft and 3G Capital hold takeover talks

Kraft and 3G Capital are reportedly in talks for a $40 billion takeover deal.

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By :  ,  Financial Analyst

Food firm Kraft and private equity company 3G Capital are in talks over a $40 billion (£27 billion) takeover deal, according to reports.

Both the Wall Street Journal and Financial Times reported that both parties are locked in "advanced talks" over 3G Capital purchasing Kraft. The Brazilian private equity firm currently owns organisations such as Burger King and Heinz and would regard the purchase of Kraft as a major coup.

The reports sparked Kraft's share price as it grew by 15 per cent in after-market trading. Tuesday's (March 24th) closing price of $61.32 placed the company's value at around $36 billion but it is expected that any prospective buyer would have to pay a premium on the market value to close the deal.

Acquisition history

3G Capital's reported pursuit of Kraft is just one in a long line of rumoured takeover bids connected to the company in recent years. The 2010 acquisition of Burger King was one of the most high profile deals in its history and saw it pay around $3.8 billion for the chain of fast food restaurants.

Three years later the company teamed up with Warren Buffett's Berkshire Hathaway to purchase condiment maker H.J. Heinz in a deal worth $23 billion. In late December 2014, 3G Capital was granted approval from the Canadian federal government to purchase Tim Hortons. This allowed the firm to merge Burger King with Tim Hortons into a restaurant chain known as Restaurant Brands International.

If the deal with Kraft goes ahead, 3G Capital will have control over brands such as Toblerone, Kenco and Oreo which come under the Mondelez company name. This came about after Kraft spun Cadbury off to Mondelez.

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