Kraft Heinz

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Heinz and Kraft are more than a century old and Warren Buffet is behind the acquisition.

Also backing the deal, Brazilian investment firm “3-G Captial” which if it sounds familiar it should be. It’s the company behind Burger King’s takeover of Tim Horton’s.

The merged company says it’s going to find one-and-a-half billion dollars in cost savings.

The deal will provide Heinz access to Kraft brands.

“So they’re going to get the peanut butter line, the cheese line, the kraft macaroni and cheese all of that.”

The merged company to be called “Kraft Heinz” says it will find $1.5 billion in cost savings over next two years. Marvin Ryder of the DeGroote School of Business says that means job cuts.

“Sometimes that’s a nice thing. You don’t have to buy more trucks. We can ship the goods on the same trucks or use the same warehouses. But 3G’s history is we acquire a company and then we start laying off.”

Kraft has three distribution centres and two manufacturing and processing facilities in Canada, with about two thousand employees. Heinz and Kraft say it’s too early to tell whether they will shutter any of their Canadian operations.

“Kraft Canada has pretty substantial operation so you can expect some of the cuts will come from there.”

Deals reporter for Bloomberg news Scott Deveau says Kraft has been struggling as younger and more affluent buyers are more interested in organic and healthy foods.

“So they’ve struggled to try to capture that market at a time when the price of meat and cheese and nuts are also climbing, so they’re faced with declining sales or stagnating sales when their costs are also going up.”

Deveau says the deal comes at a time when people are making a bet on us consumers coming back into the market and buying these kind of staples.