CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Kraft shares boosted by Heinz merger

Article By: ,  Financial Analyst
March 26, 2015 10:26 AM

Kraft Foods Group has enjoyed a huge boost in its share price following news of its merger with US food giant Heinz.

Reports emerged yesterday that Brazilian equity firm 3G Capital, owner of brands such as Burger King and Heinz, was in talks with Kraft for a $40 billion (£27 billion) takeover. The Heinz transaction is in conjunction with billionaire investor Warren Buffett's Berkshire Hathaway and has already sparked a surge in share prices.

At the close of trading in New York on Wednesday (March 25th), Kraft saw its stock rise 35 per cent to $83.17. 3G Capital's deal affects shareholders on both sides and once completed, Heinz shareholders will own 51 per cent of the combined company while their counterparts at Kraft will have a 49 per cent interest.

Mr Buffett, Berkshire Hathaway chief executive, said: "I am delighted to play a part in bringing these two winning companies and their iconic brands together. This is my kind of transaction, uniting two world-class organisations and delivering shareholder value. I'm excited by the opportunities for what this new combined organisation will achieve."

The transaction, which will create Kraft Heinz Company, aims to make annual cost savings of $1.5 billion by the end of 2017.

Key brands in the transaction

3G Capital's acquisition of Kraft brings together a number of iconic brands in both the US and UK markets. Kraft, Heinz and hotdog maker Oscar Mayer currently boast combined sales of around $29 billion. Popular products such as Kool Aid, HP Sauce, Philadelphia soft cheese spread and Planters peanuts have highlighted the value provided by all three organisations.

As part of the agreement, Kraft shareholders will receive a special cash dividend of $16.50 per share while a further dividend payment of around $10 billion is being funded by Berkshire Hathaway and 3G Capital.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024