Case Study Of Kraft-Heinz Mergers

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Case Study of Kraft-Heinz Mergers
In the late March of 2015, two investment firms – 3G Capital and Warren Buffet’s Berkshire Hathaway invested $10b and created a new merger company, The Kraft Heinz Company (NASDAQ: KHC). It is a merge between Kraft Foods Group (Kraft) and H.J. Heinz Company (Heinz). This merger will make them the third largest Food and Beverage Company in the North America and fifth in the world (CNBC, 2015).

The H.J. Heinz Company was founded in 1869 by Henry John Heinz with its headquarters in Pittsburgh, Pennsylvania. It is one of the world’s largest food producers which aim to produce affordable, convenient and healthy foods. Heinz is well known by their ketchup where 650 million bottles of Heinz ketchup is sold every year around the globe. Besides, Heinz is also expanding their market by producing a wider range of food which includes sauces; meals; snacks and infant/ nutrition (Heinz.com, 2016). It was ranked as 30th Forbes America's Largest Private Companies in 2014 and 96th Forbes Most Valuable Brands in 2013 (Forbes.com, 2016). Heinz was acquired in June 2013 by 3G Capital and Berkshire Hathaway in a $28 billion
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Its stock price surged by more than $20 per share. The fluctuation of the share price indicates a semi strong form in the market efficiency. Semi strong form market efficiency is the market price which reflects all information available to the public besides historical data. It is justified as semi strong form because both Kraft and Heinz had announced this piece of information publicly and posted it on their official website. Moreover, this merger has been celebrated by investors and the public since both of them are renowned food manufacturer in the America. In addition, Warren Buffet’s $10 billion worth of investment has increased the chances of the merger. Hence, Kraft’s stock price has been growing

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