H.J. Heinz Co., Pittsburgh, and Kraft Foods Group Inc., Northfield, IL, today announced they have entered into a definitive merger agreement to create The Kraft Heinz Co., forming the third-largest food and beverage company in North America with an unparalleled portfolio of iconic brands.

Under the terms of the agreement, which has been unanimously approved by both Heinz and Kraft’s boards of directors, Kraft shareholders will own a 49 percent stake in the combined company; current Heinz shareholders will own 51 percent on a fully diluted basis. Kraft shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. The aggregate special dividend payment of approximately $10 billion is being fully funded by an equity contribution by Berkshire Hathaway and 3G Capital.

The merger of the iconic food companies joins together two portfolios of beloved brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia. Together, the new company will have eight $1 billion-plus brands and five brands between $500 million and $1 billion.

“By bringing together these two iconic companies through this transaction, we are creating a strong platform for both U.S. and international growth,” says Alex Behring, chairman of Heinz and managing partner at 3G Capital. “Our combined brands and businesses mean increased scale and relevance both in the U.S. and internationally. We have the utmost respect for the Kraft business and its employees, and greatly look forward to working together as we integrate the two companies.”

“Together we will have some of the most respected, recognized and storied brands in the global food industry, and together we will create an even brighter future,” says John Cahill, Kraft chairman and CEO. “This combination offers significant cash value to our shareholders and the opportunity to be investors in a company very well positioned for growth, especially outside the United States, as we bring Kraft's iconic brands to international markets. We look forward to uniting with Heinz in what will be an exciting new chapter ahead.”

“We are thrilled about the unique opportunities this merger will create for our consumers worldwide, as well as our employees and business partners,” says Bernardo Hees, Heinz CEO. “Together, Heinz and Kraft will be able to achieve rapid expansion, while delivering the quality, brands and products that our consumers love. Over the past two years, we have transformed Heinz into one of the most efficient and profitable food companies in the world while reinvesting behind our key brands and continuing our relentless commitment to quality and innovation.”

When the transaction closes, Behring will become chairman of The Kraft Heinz Co. Cahill will become vice chairman and chair of a newly formed operations and strategy committee of the board of directors. Hees will be appointed CEO of The Kraft Heinz Co. The new executive team for the combined global company will be announced during the transition period, but no later than transaction closing.

The board of directors of the combined company will consist of five members appointed by the current Kraft board, as well as the current Heinz board, including three members from Berkshire Hathaway and three members from 3G Capital.

The Kraft Heinz Co. will be co-headquartered in Pittsburgh and the Chicago area.