US food giant Heinz is to merge with Kraft Foods Group, creating what the companies say will be the third-largest food and beverage company in the US.
The deal was engineered by Heinz’s owners, the Brazilian investment firm 3G Capital, and billionaire investor Warren Buffett’s Berkshire Hathaway.
Current Heinz shareholders will own 51% of the combined company with Kraft shareholders owning a 49% stake.
The combined company’s brands will include Kraft, Heinz, and Oscar Mayer.
3G and Berkshire Hathaway bought Heinz two years ago for $23bn and took the company private in 2013.
Warren 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 combined firm, Kraft Heinz Company, expects to make $1.5bn (£1bn) cost savings per year by the end of 2017.
Alex Behring, chairman of Heinz and the managing partner at 3G Capital, said: “By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth.”
John Cahill, Kraft chairman and chief executive said: “We look forward to uniting with Heinz in what will be an exciting new chapter ahead.”