Before the opening bell on Wednesday, Kraft Foods (KRFT) announced that it has agreed to merge with H.J. Heinz. Here’s what the merger means for mutual fund investors.
Inside the Deal
Kraft announced that the two companies have agreed to merge, and will create The Kraft Heinz Company. This deal will create the fifth largest food company in the world, and the third largest food company in the United States.
The combined company is expected to have revenue of about $28 billion. Under the agreement, Kraft shareholders will own 49% of the combined company. Kraft shareholders will also receive a $16.50 special dividend.
Packaged Foods Companies Struggle
Kraft is just one of the many packaged-foods companies that has been struggling with changing consumer tastes. Consumers have been purchasing fresher and healthier food products, which has put pressures of many food companies. This deal will help the combined company expand its product offerings, and is aimed to help Kraft’s earnings turnaround.
Mutual Funds to Watch
Investors interested in KRFT may be interested in the funds listed below. These funds currently have the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| VTSMX | Vanguard Total Stock Market Index | 1.75% |
| VWINX | Vanguard Wellesley Income Fund | 1.38% |
| VFINX | Vanguard 500 Index | 1.12% |
The Bottom Line
The funds listed above allow investors to gain exposure to KRFT while remaining diversified. Investors interested in KRFT may also be interested in General Mills (GIS) or JM Smucker (SJM).
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