The purchase will not be a cheap one as 3G Capital is willing to pay approximately $40 billion to get its hands on Kraft.
This is not the first time 3G Capital buys a major manufacturer; in February 2013 the company announced that it will acquire the famous ketchup and beans maker Heinz. The deal cost 3G Capital almost $23.2 billion.
But 3G Capital’s best known acquisition was Burger King in 2010, a deal closed for $3.8 billion.
Some believe that after 3G Capital makes Kraft its own it will probably merge it with Heinz. Buffett announced that in May he will be working with 3G Capital on other transactions.
Kraft’s share rose by 16.5% reaching $71.44 after the announcement was made. The first to speculate the deal was the Wall Street Journal and said that Kraft could be worth approximately $40 billion. At the moment Kraft is not doing very well in the U.S. as a packaged foods company.
Thomson Reuters data announced that as of March 2, Kraft Foods had 588.13 million shares. Recent reports show that Kraft has a market capitalization of almost $36.06 billion, based on its close of $61.32 close from Tuesday.
Kraft, Berkshire and 3G Capital have not made any official comments on the current deal.
3G Capital is looking at future acquisitions after their investors have pledged more than $5 billion for forming a new takeover fund, according to reports made by the Journal back in January.
3G Capital received heavy criticism in the past after the company decided to cut thousands of jobs following the Heinz acquisition. Also, four months after 3G Capital and Berkshire took over, 11 out of 12 executives at Heinz were replaced, which caused a series of major layoffs.
Unlike other food companies, Kraft Foods Group has not expanded into other areas like organic and natural foods through acquisitions.
In 2012, Kraft divided into two companies; after the split Kraft Foods focused on grocery goods in North America, while the other company, Mondelez International Inc. –which owns the Cadbury brand- focused on snack products.
Image Source: cnbc
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