The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Anjani Sinha, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur.
On the 25th of March, 2015, The Hindu published news about H.J. Heinz Co. buying Kraft Foods, creating one of the largest food and beverage companies in the world with annual revenue in excess of $28 billion.
This deal was actually handled by Berkshire Hathway and the company that owns Brazilian investment firm 3G capital. The Kraft Heinz Company would be new company emerging from the 10 billion investments. Due to the merger Kraft’s share has shot up by 14% percent. This venture has actually united two massive organizations and would definitely benefit the stakeholders. Some of the formalities for the merger are yet to be done. The merger is yet another specimen of the finest business decisions that Berksire Hathway has been taking under Warren Buffet.
But, we cannot neglect the various challenges that the new company would be facing. First ,there is a tremendous change in the consumer taste. Second, Kraft has been under customer apprehension due to some controversies over the freshness of the food. Standard and Poor, world’s largest credit rating agency has also placed Kraft Heinz Co. on watch. This might be a pointer to the shareholder about the ambiguity in the success of the merger.