H.J. Heinz Co., Pittsburgh, Pa., and Kraft Foods Group, Inc., Northfield, Ill., entered into a definitive merger agreement to create The Kraft Heinz Co., what is said to be Kraft Heinz mergerthe third largest food and beverage company in North America.

Under the terms of the agreement, Kraft shareholders will own a 49% stake in the combined company, and current Heinz shareholders will own 51% 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 combination of these iconic food companies joins together two portfolios of brands, including Heinz, Kraft, Oscar Mayer, Ore-Ida and Philadelphia. Together, The Kraft Heinz Co. will have eight $1 billion-plus brands and five brands between $500 million and $1 billion. The complementary nature of the two brand portfolios presents substantial opportunity for synergies, which will result in increased investments in marketing and innovation.

"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, chairman and CEO for Kraft. "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. Together, Heinz and Kraft will be able to achieve rapid expansion while delivering the quality, brands and products that our consumers love," adds Bernardo Hees, chief executive officer for Heinz. "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, Alex Behring, chairman of Heinz and the managing partner at 3G Capital, will become the 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 chief executive officer of The Kraft Heinz Co.

The Kraft Heinz Co. will be co-headquartered in Pittsburgh and Northfield.

The transaction is subject to approval by Kraft shareholders, and is expected to close in the second half of 2015.