heinz and kraft have begun the process of merging to form what will be north america&rsquos third largest food company and one of the world&rsquos most significant packaging operations.warren buffet&39s berkshire hathaway and 3g, heinz&39s owners, will have a 51 stake in the combined firm, to be called the kraft heinz company, with a 49 stake to be held by kraft&39s existing shareholders. the proposed company would have revenue of about 35.7 billion us28 billion a year. pepsico, the world&rsquos market leader, has annual revenue of roughly double that amount."this is my kind of transaction, uniting two worldclass organisations and delivering shareholder value," buffett, chairman and chief executive of berkshire hathaway, said in a statement.there is no doubt that kraft&rsquos recent struggles to maintain its market position as consumers look for healthier foods has played a role in the decision. kraft has overhauled its senior management over the past few months and has already stated its intention to develop products that meet changing consumer preferences.the new company will have eight billion dollar brands and five others worth more than 500 million in sales.it has an annual cost savings target of 1.9 billion us1.5 billion by the end of 2017, which is also their target for making the deal &ldquoearningsaccretive.&rdquo3g and berkshire will fund the special dividend entirely out of their own pockets, to avoid any rise in kraft&rsquos debt level. they companies have stated their commitment to retaining the company&rsquos investmentgrade credit rating.heinz brands include heinz signature ketchup, baked beans, oraida potato products, weight watchers packaged foods and philadelphia cream cheese. kraft&39s portfolio includes jello, maxwell house coffee and koolaid.in australia, former kraft products such as vegemite and kraft peanut butter are now owned by kraft spinoff, mondelez, which is not involved in this deal.the deal has been unanimously approved by the companies&39 boards of directors. if passed by the regulatory bodies, it will return heinz to being a public company after berkshire and 3g took it private in 2013 in a 28 billion acquisition. there are not expected to be any antitrust challenges because there is little overlap in the companies&39 products."by bringing together these two iconic companies through this transaction, we are creating a strong platform for both us and international growth," said alex behring, chairman of heinz and the managing partner at 3g capital.behring will become chairman of the new company. bernardo hees, currently heinz&rsquos chief executive, will become its chief executive officer. kraft, chief executive officer, john cahill, will become vicechairman and will head a newlyformed operations and strategy committee.food and beverage giants heinz and kraft will merge to create a us28bn behemoth owning some of the world&rsquos most iconic brands including cadbury.heinz&rsquos owners, venture capital firms 3g capital and billionaire warren buffett&rsquos berkshire hathaway, will own 51 per cent of the combined kraft heinz company after buying us10bn in shares.kraft and heinz say the new entity will be the third biggest food and beverage company in north america. it will surely have one of the biggest packaging operations in the world across a huge range of products.heinz senior management will be calling the shots with chairman alex behring and chief executive bernardo hees continuing in their roles for the combined company, while kraft chairman and chief executive john cahill will merely be vice chairman.the deal is unanimously backed by the boards of both companies, but still needs approval from kraft shareholders. it is targeted to close in the second half of the year. 
