Kraft in talks to be acquired by Brazil's 3G Capital: source

Tue Mar 24, 2015 10:17pm EDT
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By Olivia Oran

(Reuters) - Kraft Foods Group Inc KRFT.O, maker of Velveeta cheese and Oscar Mayer meats, is in talks to be acquired by Brazilian private equity firm 3G Capital, a source familiar with the matter told Reuters on Tuesday.

3G teamed up with Warren Buffett's Berkshire Hathaway Inc (BRKa.N: Quote) to acquire Ketchup maker H.J. Heinz Co for $23.2 billion two years ago. 3G is now expected to merge Kraft with Heinz if it clinches a deal.

Buffett had said in May he expected to work with 3G on more transactions.

Shares of Kraft, which is battling sluggish demand for packaged food products in the United States, rose as much as 16.5 percent to $71.44 in trading after the bell.

The Wall Street Journal first reported on the possible deal and said Kraft may be valued at $40 billion.

Kraft had 588.13 million shares outstanding as of March 2, according to Thomson Reuters data. Based on Tuesday's close of $61.32, Kraft had a market capitalization of $36.06 billion.

3G Capital, Berkshire and Kraft were not available for comment outside regular U.S. business hours.

The Brazilian private equity firm is looking at new acquisition targets after investors pledged about $5 billion to form a new takeover fund, the Journal had reported in January.   Continued...

Kraft cheese products are seen on the shelf at a grocery store in Washington, May 3, 2012. REUTERS/Jonathan Ernst