M&A_Project.pdf - M&A Project Merger deal of Heinz and Kraft FINC D55 Mergers Acquisitions Professor Eduard M Sprokholt Presented By Ms Phatheera

M&A_Project.pdf - M&A Project Merger deal of Heinz and...

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M&A Project Merger deal of Heinz and Kraft FINC D55 Mergers & Acquisitions Professor Eduard M . Sprokholt Presented By Ms . Phatheera Nicknipa D590015 Mr . Kantaphon Klinjui D600010 Ms . Dolpapat Thiangchanya D600011 Ms . Hataithip Vittayawacharin D600027 Ms . Tunchanok Winaivorrasakul D600039
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Executive Summary Kraft Heinz was formed through the merger of the public company, Kraft Foods Group and the private company, H.J. Heinz. Both companies are in the same industry, Food and beverage. The merger took place in July 2015, and brought Heinz back onto the public market. The merger deal was driven by Heinz’s owners, 3G Capital and Berkshire Hathaway, through issuing 1 stock of Kraft Heinz in trade with 1 stock of Kraft Food Group. Additionally, Heinz also pay a one-time cash dividend of $16.5 per share, approximately $10 billion, to shareholders of Kraft Foods. Shareholders of H.J. Heinz sacrifice its own value by diluting the stock to make portion of 51%-to-49% for pro-forma. While Heinz had a global platform about 61% of the total sales comes from international market, Kraft Foods generate 98% of its sales from North America. The two companies combined can thus sell Kraft’s well -known brands on the international market, boosting the revenue growth. Moreover, EBIT margin will be improved from the deal. 3G Capital has strong experience in cost saving, and would utilize unique link and distinctive skill of the merger to create synergy through cost saving. Deal decision maker - Berkshire Hathaway (51% shareholder in Heinz) is well-known as a value buyer, this type of buyer typically focuses on the sustainable and competitive advantage deal with a good investment in return. - 3G Capital (46% shareholder in Heinz), the Brazilian billionaires, 3G capital is more like financial buyer who emphasize on Business performance improvement with 3 distinctive components including revenue growth, EBIT margin and Asset Efficiency. Having 3G Capital as his partner in the Heinz deal gave Buffet all of the confidence he needed to move forward and go after Kraft, because 3G Capital is an expert in cost saving from M&A. In this deal, B.H and 3G Capital have to pay $5bn each, as dividend to Kraft’s shareholders, in order to merge. Deal financing Under the terms of the agreement, cash consideration is fully funded by common equity from Berkshire Hathaway and 3G Capital to pay a dividend of $16.50 per share, approximately $10 billion to Kraft shareholders and each share of Kraft will be converted into one share of The Kraft Heinz Company. The merger is not expected to increase the debt levels of The Kraft Heinz Company. The Company is fully committed to deleveraging in a timely manner and to maintaining an investment grade rating going forward. Prior, H.J. Heinz reverse stock split with 1:0.443 ratio, making #share reduces from 1335m to 592m. Kraft Heinz also convert one share of Heinz into one share of Kraft Heinz. Ultimately, Kraft Heinz is owned 51% by Heinz shareholders and 49% by Kraft shareholders.
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  • Summer '19
  • Revenue, H. J. Heinz Company, Kraft Heinz

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