S-4/A 1 d898418ds4a.htm AMENDMENT NO. 1 TO FORM S-4 Amendment No. 1 to Form S-4
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As filed with the Securities and Exchange Commission on May 18, 2015

Registration No. 333-203364

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Amendment No. 1

to the

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

H.J. HEINZ HOLDING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware   2030   46-2078182
(State of Incorporation)  

(Primary Standard Industrial

Classification Code Number)

 

(IRS Employer

Identification No.)

One PPG Place

Pittsburgh, Pennsylvania 15222

Telephone: (412) 456-5700

(Address, including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Dan F. Shaw

Senior Vice President and General Counsel

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

 

With a copy to:

 

Scott A. Barshay, Esq.

Eric L. Schiele, Esq.

Jonathan L. Davis, Esq.

Cravath, Swaine & Moore LLP

825 Eighth Avenue

New York, New York 10019

(212) 474-1000

 

Kim K. W. Rucker, Esq.

Executive Vice President,

Corporate & Legal Affairs,

General Counsel and

Corporate Secretary

Kraft Foods Group, Inc.

Three Lakes Drive

Northfield, Illinois 60093

(847) 646-2000

 

Francis J. Aquila, Esq.

Audra D. Cohen, Esq.

Catherine M. Clarkin, Esq.

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

(212) 558-4000

 

 

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement is declared effective.

If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.  ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended (the “Securities Act”), check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

 

 

CALCULATION OF REGISTRATION FEE

 

 

Title of each class of

securities to be registered

Amount

to be

registered

Proposed

maximum

offering price

per unit

Proposed

maximum

aggregate

offering price

Amount of

registration fee

Common stock, par value $0.01 per share

  608,978,330 shares(1)   N/A   $43,671,358,490.13(2)   $5,074,611.86(3)(4)

 

 

(1) Represents the estimated maximum number of shares of common stock, par value $0.01 per share, of the registrant to be issued upon completion of the merger described in the proxy statement/prospectus contained herein and is based upon the number of issued and outstanding shares of Kraft common stock on the date hereof, which will be converted into shares of the registrant on a one-to-one basis, and the maximum number of shares that Kraft may issue prior to the merger, which will also be so converted on a one-to-one basis.
(2) Pursuant to Rules 457(c), 457(f)(1) and 457(f)(3) promulgated under the Securities Act and solely for the purpose of calculating the registration fee, the proposed aggregate maximum offering price is $43,671,358,490.13. Such amount equals (i) the product of (a) 608,978,330, the estimated maximum number of shares to be registered, and (b) $88.2125, the average of the high and low sales prices for Kraft common stock as reported on the NASDAQ Stock Market on April 8, 2015 minus (ii) $10,048,142,445.00 (the estimated amount of cash to be paid by the registrant to Kraft shareholders in the form of a special cash dividend of $16.50 per share of Kraft common stock).
(3) Computed in accordance with Rule 457(f) under the Securities Act to be $5,074,611.86, which is equal to 0.0001162 multiplied by the proposed maximum aggregate offering price of $43,671,358,490.13.
(4) Previously paid in connection with the initial filing of this registration statement on April 10, 2015.

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the SEC, acting pursuant to said Section 8(a), may determine.

 

 

 


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The information in this proxy statement/prospectus is not complete and may be changed. H.J. Heinz Holding Corporation may not sell the securities offered by this proxy statement/prospectus until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and H.J. Heinz Holding Corporation is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY—SUBJECT TO COMPLETION, DATED MAY 18, 2015

 

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

 

 

[], 2015

Dear Shareholders:

I am pleased to invite you to attend a special meeting of shareholders of Kraft Foods Group, Inc., a Virginia corporation, which we refer to as Kraft, to be held on [], 2015 at [], [CDT], at the []. As previously announced, H.J. Heinz Holding Corporation, a Delaware corporation, which we refer to as Heinz, Kite Merger Sub Corp., a Virginia corporation and a wholly owned subsidiary of Heinz, which we refer to as merger sub I, Kite Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Heinz, which we refer to as merger sub II, and Kraft, have entered into an Agreement and Plan of Merger, dated as of March 24, 2015, which we refer to as the merger agreement. Pursuant to the terms of the merger agreement, in a series of transactions, Kraft will merge with and into a subsidiary of Heinz. At the closing of the merger, H.J. Heinz Holding Corporation will be renamed “The Kraft Heinz Company.”

Upon the completion of the merger, each share of common stock, without par value, of Kraft, which is referred to as the Kraft common stock, issued and outstanding immediately prior to the effective time of the merger (other than deferred shares and restricted shares), will be converted into the right to receive one share of common stock of The Kraft Heinz Company, which we refer to as Kraft Heinz common stock. In addition, prior to the effective time of the merger, Kraft will declare a special cash dividend equal to $16.50 per share of Kraft common stock to shareholders of Kraft as of a record date immediately prior to the closing of the merger. Based on the estimated number of shares of Kraft and Heinz common stock that will be outstanding immediately prior to the closing of the merger, it is anticipated that, upon closing, existing Heinz shareholders will own approximately 51% of the outstanding shares of Kraft Heinz common stock and former Kraft shareholders will own approximately 49% of the outstanding shares of Kraft Heinz common stock, in each case on a fully diluted basis. Kraft has concluded that shareholders will not have appraisal rights under the Virginia Stock Corporation Act with respect to the merger.

At the special meeting of Kraft shareholders, Kraft shareholders will be asked to vote on (i) a proposal to approve the merger agreement, which we refer to as the merger proposal, (ii) a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger, which we refer to as the compensation proposal, and (iii) a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve the merger agreement, which we refer to as the adjournment proposal.

The merger cannot be completed unless Kraft shareholders holding at least a majority of the shares of Kraft common stock outstanding as of the close of business on [], 2015, the record date for the special meeting, vote in favor of the merger proposal at the special meeting. A failure to vote, a broker non-vote or an abstention, will have the same effect as a vote “AGAINST” the merger proposal. For the compensation proposal and the adjournment proposal to be approved, votes cast “FOR” each proposal must exceed votes cast “AGAINST.” Additionally, shares that are present at the special meeting but are not voted, whether due to broker non-vote, abstention or otherwise, will be counted neither as “FOR” nor “AGAINST” the compensation proposal or the adjournment proposal.

We cannot complete the merger unless the Kraft shareholders approve the merger proposal. The merger is not conditioned on approval of the compensation proposal or the adjournment proposal. Your vote is very important, regardless of the number of shares you own. Whether or not you expect to attend the special meeting of Kraft shareholders in person, please submit a proxy to vote your shares as promptly as possible so that your shares may be represented and voted at the special meeting.


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The Kraft board of directors has unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement, and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby. ACCORDINGLY, THE KRAFT BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT KRAFT SHAREHOLDERS VOTE “FOR” THE MERGER PROPOSAL, “FOR” THE COMPENSATION PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.

In considering the recommendation of the Kraft board of directors, you should be aware that the directors and executive officers of Kraft will have interests in the merger that are different from, and in addition to, the interests of Kraft shareholders generally. See the section entitled “Financial Interests of Kraft’s Directors and Executive Officers in the Merger” beginning on page [] of the proxy statement/prospectus.

The obligations of Kraft and Heinz to complete the merger are subject to the satisfaction or waiver of several conditions set forth in the merger agreement, a copy of which is included herein as Annex A. The proxy statement/prospectus provides you with detailed information about the proposed merger. It also contains or references information about Kraft and Heinz and certain related matters. You are encouraged to read this document carefully. In particular, you should read the “Risk Factors” section beginning on page [] for a discussion of the risks you should consider in evaluating the proposed transaction and how it will affect you. If you have any questions regarding this proxy statement/prospectus, you may contact Innisfree M&A Incorporated, Kraft’s proxy solicitor, by calling toll-free at (877) 750-9498. Banks, brokerage firms and other nominees may call collect at (212) 750-5833.

On behalf of the Kraft board of directors, thank you for your consideration and continued support. We look forward to the successful completion of the merger.

Sincerely,

John T. Cahill

Chairman and Chief Executive Officer

Kraft Foods Group, Inc.

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger, the issuance of Kraft Heinz common stock in connection with the merger or the other transactions contemplated by the merger agreement or determined that this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

This document is dated [], 2015 and is first being mailed to Kraft shareholders on or about [], 2015.


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LOGO

Kraft Foods Group, Inc.

Three Lakes Drive

Northfield, Illinois 60093

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

Notice is hereby given that a special meeting of shareholders of Kraft Foods Group, Inc., a Virginia corporation, which we refer to as Kraft, which will be held on [], 2015 at [], [CDT], at the [], for the following purposes:

 

  1 to vote on a proposal to approve the Agreement and Plan of Merger, which we refer to as the merger agreement, dated as of March 24, 2015, among H.J. Heinz Holding Corporation, a Delaware corporation, which we refer to as Heinz, Kite Merger Sub Corp., a subsidiary of Heinz, Kite Merger Sub LLC, a subsidiary of Heinz, and Kraft, a copy of which is included as Annex A to the proxy statement/prospectus of which this notice forms a part, which we refer to as the merger proposal;

 

  2 to vote on a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger, which we refer to as the compensation proposal; and

 

  3 to vote on a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve the merger agreement, which we refer to as the adjournment proposal.

Your proxy is being solicited by the Kraft board of directors. The Kraft board of directors has unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby. ACCORDINGLY, THE KRAFT BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT KRAFT SHAREHOLDERS VOTE “FOR” THE MERGER PROPOSAL, “FOR” THE COMPENSATION PROPOSAL AND “FOR” THE ADJOURNMENT PROPOSAL.

The Kraft board of directors has fixed the close of business on [], 2015 as the record date for determination of Kraft shareholders entitled to receive notice of, and to vote at, the special meeting of Kraft shareholders or any adjournments or postponements thereof. Only holders of record of Kraft common stock at the close of business on the record date are entitled to receive notice of, and to vote at, the special meeting. The merger cannot be completed unless Kraft shareholders holding at least a majority of the shares of Kraft common stock outstanding as of the record date vote in favor of the merger proposal. A failure to vote, a broker non-vote or an abstention will have the same effect as a vote “AGAINST” the merger proposal. For the compensation proposal and the adjournment proposal to be approved, votes cast “FOR” each proposal must exceed votes cast “AGAINST” at the special meeting (whether in person or by proxy). Additionally, shares that are present at the special meeting but are not voted, whether due to broker non-vote, abstention or otherwise, will be counted neither as “for” nor “against” the compensation proposal or the adjournment proposal.

Your vote is very important. To ensure your representation at the special meeting of Kraft shareholders, please complete and return the enclosed proxy card or submit your vote through the Internet or telephonically. Whether or not you plan to attend the meeting, we urge you to vote. Registered shareholders may vote (i) via the Internet at www.proxyvote.com; (ii) by telephone; (iii) by returning a properly executed proxy card; or (iv) in person at the special meeting. If your shares are held in the name of a bank, broker or other nominee, follow the instructions you receive from your nominee on how to vote your shares. Registered shareholders who attend the meeting may vote their shares personally even if they previously have voted their shares.


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If you would like to attend the Kraft special meeting, you must have been a shareholder of record on the record date for the special meeting and you must obtain an admission ticket in advance. Admission tickets can be printed by accessing Shareholder Meeting Registration at www.proxyvote.com and following the instructions provided (you will need the 16-digit control number included on your proxy card, voting instruction form or notice). Requests for admission tickets will be processed in the order in which they are received and must be requested no later than [], 2015. If you are unable to print your admission ticket, please promptly send a notification by mail, fax or e-mail as follows:

 

By mail:

[]

By fax:

[]

By e-mail:

[            ].com

Shareholders may direct questions about the admission tickets by email to [].com or by calling []. Due to space constraints and other security considerations, we are not able to admit the guests of either shareholders or their legal proxy holders. Admission to the Kraft special meeting is available on a first-come, first-served basis. In addition to an admission ticket, you will be asked to present valid government-issued photographic identification, such as a driver’s license, to be admitted into the special meeting. Security measures may include bag search, metal detector and other search devices. The use of cameras (including cell phones with photographic capabilities), recording devices, smart phones and other electronic devices is strictly prohibited.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Innisfree M&A Incorporated, Kraft’s proxy solicitor, by calling toll-free at (877) 750-9498. Banks, brokerage firms and other nominees may call collect at (212) 750-5833.

 

 

Kim K. W. Rucker

Executive Vice President, Corporate and Legal Affairs,

General Counsel and Corporate Secretary


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Kraft from other documents that Kraft has filed with the SEC, and that are contained in or incorporated by reference into this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, DC 20549, and through the SEC’s website at www.sec.gov.

Any person may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning Kraft, without charge, by written or telephonic request directed to Kraft, Three Lakes Drive, Northfield, Illinois 60093, Telephone: (847) 646-2000; or Innisfree, Kraft’s proxy solicitor, by calling toll-free at (877) 750-9498. Banks, brokerage firms and other nominees may call collect at (212) 750-5833.

In order for you to receive timely delivery of the documents in advance of the special meeting of Kraft shareholders to be held on [], you must request the information no later than five business days prior to the date of the special meeting (i.e., by []).

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by Heinz (File No. 333-203364), constitutes a prospectus of Heinz under Section 5 of the Securities Act with respect to the shares of common stock of H.J. Heinz Holding Corporation to be issued to Kraft shareholders pursuant to the merger agreement. At the closing of the merger, H.J. Heinz Holding Corporation will be renamed “The Kraft Heinz Company.”

This document also constitutes a proxy statement of Kraft under Section 14(a) of the Securities Exchange Act. It also constitutes a notice of meeting with respect to the special meeting, at which Kraft shareholders will be asked to consider and vote upon the merger proposal, the compensation proposal and the adjournment proposal.

Heinz has supplied all information contained in this proxy statement/prospectus relating to Heinz, and Kraft has supplied all information contained in or incorporated by reference into this proxy statement/prospectus relating to Kraft.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. Heinz and Kraft have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated [], 2015, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Kraft shareholders nor the issuance by The Kraft Heinz Company of shares of Kraft Heinz common stock pursuant to the merger agreement will create any implication to the contrary.

 

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DEFINITIONS

Unless otherwise indicated or as the context otherwise requires, a reference in this proxy statement/prospectus to:

 

    “3G Capital” refers to 3G Capital Ltd., a Cayman Islands exempted limited partnership, and certain of its affiliates;

 

    “3G Global Food Holdings” refers to 3G Global Food Holdings, L.P., a Cayman Islands exempted limited partnership;

 

    “adjournment proposal” refers to the proposal to approve one or more adjournments of the special meeting of Kraft shareholders, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the merger proposal;

 

    “Berkshire Hathaway” refers to Berkshire Hathaway Inc., a Delaware corporation;

 

    “Code” refers to the Internal Revenue Code of 1986, as amended;

 

    “compensation proposal” refers to the proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger;

 

    “Exchange Act” refers to the U.S. Securities Exchange Act of 1934, as amended;

 

    “internal contributions” refers to (i) the capital contribution of 100% of the surviving company interests made by The Kraft Heinz Company to Hawk Acquisition Intermediate Corporation I in exchange for one share of Hawk Acquisition Intermediate Corporation I’s common stock, par value $0.01 per share, immediately following the effective time of the subsequent merger, (ii) the capital contribution of 100% of the surviving company interests made by Hawk Acquisition Intermediate Corporation I to H.J. Heinz Corporation II in exchange for one share of H.J. Heinz Corporation II’s common stock, par value $0.01 per share, immediately following the contribution contemplated by (i) above, and (iii) the capital contribution of 100% of the surviving company interests made by H.J. Heinz Corporation II to H. J. Heinz Company in exchange for one share of H. J. Heinz Company’s common stock, without par value, immediately following the contribution contemplated by (ii) above;

 

    “internal transactions” refers to the internal contributions and the final merger, collectively;

 

    “Innisfree” refers to Innisfree M&A Incorporated, Kraft’s proxy solicitor;

 

    “DGCL” refers to the General Corporation Law of the State of Delaware;

 

    “effective time of the merger” refers to the time the merger becomes effective;

 

    “equity investment” refers to the investments to be made by 3G Global Food Holdings and Berkshire Hathaway in Heinz, pursuant to the equity investment letters, collectively, immediately prior to the consummation of the merger;

 

    “equity investment letters” refers to the equity commitment letters Heinz has entered into with each of Berkshire Hathaway and 3G Global Food Holdings setting out the terms of the equity investments;

 

    “final merger” refers to the merger of merger sub II with and into H. J. Heinz Company following completion of the internal contributions, with H. J. Heinz Company surviving as an indirect wholly owned subsidiary of The Kraft Heinz Company;

 

    “fully diluted”, when used in reference to the total ownership of the combined company of 51% or 49%, as applicable, means fully diluted based on the treasury stock method;

 

    “GAAP” refers to accounting principles generally accepted in the United States of America;

 

    “Heinz”, except where otherwise specified or the context requires, refers to H.J. Heinz Holding Corporation, a Delaware corporation. At the closing of the merger, H.J. Heinz Holding Corporation will be renamed “The Kraft Heinz Company”;

 

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    “Heinz common stock” refers to the common stock, par value $0.01 per share, of Heinz;

 

    “initial surviving company” refers to Kraft following the merger;

 

    “Kraft” refers to Kraft Foods Group, Inc., a Virginia corporation;

 

    “Kraft common stock” refers to the common stock, without par value, of Kraft;

 

    “Kraft Heinz common stock” refers to the common stock, par value $0.01 per share, of The Kraft Heinz Company as of and after the closing of the merger;

 

    each of “The Kraft Heinz Company” and the “combined company” refers to Heinz and its subsidiaries, collectively, following the completion of the merger;

 

    “merger” refers to the merger of merger sub I with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of Heinz;

 

    “merger agreement” refers to the Agreement and Plan of Merger, dated as of March 24, 2015, by and among Heinz, merger sub I, merger sub II and Kraft, a copy of which is attached as Annex A to this proxy statement/prospectus;

 

    “merger proposal” refers to the proposal to approve the merger agreement;

 

    “merger sub I” refers to Kite Merger Sub Corp., a Virginia corporation and a direct wholly owned subsidiary of Heinz;

 

    “merger sub II” refers to Kite Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Heinz;

 

    “NASDAQ” refers to the NASDAQ Stock Market;

 

    “new Kraft Heinz by-laws” refers to the amended and restated by-laws for Heinz in substantially the form attached as Annex D, which will become effective immediately prior to the effective time of the merger, and which will be applicable to the combined company following the completion of the merger;

 

    “new Kraft Heinz charter” refers to the second amended and restated certificate of incorporation for Heinz in substantially the form attached as Annex C, which will become effective immediately prior to the effective time of the merger, and which will be applicable to the combined company following the completion of the merger;

 

    “NYSE” refers to the New York Stock Exchange;

 

    “SEC” refers to the Securities and Exchange Commission;

 

    “Securities Act” refers to the U.S. Securities Act of 1933, as amended;

 

    “special dividend” refers to the special cash dividend of $16.50 per share of Kraft common stock to be received by the holders of record of the issued and outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger;

 

    “special meeting” refers to the special meeting of Kraft shareholders to be held on [], or any adjournment thereof, at which Kraft shareholders will be asked to consider and vote upon the merger proposal and the compensation proposal;

 

    “Sponsors” refers to Berkshire Hathaway and 3G Global Food Holdings collectively;

 

    “subsequent merger” refers to the merger of Kraft, as the surviving corporation in the merger, with and into merger sub II, with merger sub II surviving the subsequent merger as a direct wholly owned subsidiary of The Kraft Heinz Company;

 

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    “surviving company” refers to merger sub II following the subsequent merger;

 

    “surviving company interests” refers to the capital stock of the surviving company;

 

    “VSCA” refers to the Virginia Stock Corporation Act; and

 

    “we”, “our” and “us” refers to Heinz or Kraft, as applicable, prior to completion of the merger and The Kraft Heinz Company following the completion of the merger.

 

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TABLE OF CONTENTS

 

     Page  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

     1   

SUMMARY

     12   

Parties to the Merger

     12   

The Merger and the Merger Agreement

     13   

Merger Consideration

     13   

Pre-Closing Heinz Share Conversion

     13   

Post-Closing Ownership

     14   

Equity Investments

     14   

Governance of The Kraft Heinz Company Following the Merger

     14   

Recommendation of the Kraft Board; Kraft’s Reasons for the Merger

     15   

Opinion of Kraft’s Financial Advisor

     16   

Information About the Special Meeting

     16   

Financial Interests of Kraft’s Directors and Executive Officers in the Merger

     17   

Regulatory Approvals

     18   

No Appraisal Rights

     19   

Listing of Kraft Heinz Common Stock on the []

     19   

Conditions to Completion of the Merger

     19   

No Solicitation or Negotiation of Acquisition Proposals

     20   

Alternative Proposals

     21   

No Change in Recommendation or Alternative Acquisition

     21   

Termination of the Merger Agreement

     22   

Termination Fees and Expenses

     22   

Other Related Agreements

     23   

Accounting Treatment

     23   

Material U.S. Federal Income Tax Consequences of the Merger, the Subsequent Merger and the Special Dividend

     24   

Federal Securities Law Consequences

     24   

Debt Matters

     24   

Amendment and Restatement of Heinz Charter and By-Laws

     25   

Comparison of Rights of The Kraft Heinz Company Shareholders and Kraft Shareholders

     25   

Litigation Related to the Merger

     25   

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     27   

RISK FACTORS

     29   

Risks Relating to the Merger

     29   

Risks Relating to the Combined Company Following the Merger

     34   

Risks Relating to Ownership of Kraft Heinz Common Stock

     39   

Risks Relating to Heinz’s Business

     41   

Risks Relating to Kraft’s Business

     45   

INFORMATION ABOUT THE SPECIAL MEETING

     46   

THE PARTIES TO THE MERGER

     51   

THE MERGER

     53   

Merger and Internal Transactions

     53   

Merger Consideration

     53   

Pre-Closing Heinz Share Conversion

     53   

Equity Investments

     53   

Ownership of the Combined Company

     54   

Debt Matters

     54   

Background of the Merger

     56   

Recommendation of the Kraft Board; Kraft’s Reasons for the Merger

     64   

Opinion of Kraft’s Financial Advisor

     68   

Certain Forecasts

     79   

Heinz’s Reasons for the Merger

     82   

 

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Approval of New Kraft Heinz Charter and Issuance of Kraft Heinz Common Stock

  83   

Governance of The Kraft Heinz Company Following the Merger

  83   

Amendment and Restatement of Heinz Charter and By-Laws

  84   

Closing and Effective Time of the Merger

  85   

Regulatory Approvals

  85   

Federal Securities Law Consequences

  86   

Accounting Treatment

  86   

Dividend Policy Following the Merger

  86   

[] Market Listing

  87   

Delisting and Deregistration of Kraft Common Stock

  87   

Litigation Related to the Merger

  87   

THE MERGER AGREEMENT

  89   

Explanatory Note Regarding the Merger Agreement

  89   

Description of the Merger Agreement

  89   

OTHER RELATED AGREEMENTS

  110   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF KRAFT

  112   

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF HEINZ

  114   

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

  118   

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

  135   

MARKET PRICES OF KRAFT COMMON STOCK AND DIVIDEND INFORMATION

  136   

BUSINESS OF H.J. HEINZ HOLDING CORPORATION

  137   

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF H.J. HEINZ HOLDING CORPORATION

  140   

MANAGEMENT AND OTHER INFORMATION OF THE COMBINED COMPANY

  191   

EXECUTIVE COMPENSATION

  199   

2013 OMNIBUS INCENTIVE PLAN

  211   

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

  213   

RELATED PERSON TRANSACTIONS

  214   

ADVISORY VOTE ON MERGER-RELATED COMPENSATION FOR KRAFT’S NAMED EXECUTIVE OFFICERS

  216   

FINANCIAL INTERESTS OF KRAFT’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

  219   

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

  224   

DESCRIPTION OF KRAFT HEINZ CAPITAL STOCK

  227   

COMPARISON OF RIGHTS OF THE KRAFT HEINZ COMPANY SHAREHOLDERS AND KRAFT SHAREHOLDERS

  233   

NO APPRAISAL RIGHTS

  244   

CERTAIN BENEFICIAL OWNERS OF KRAFT COMMON STOCK

  245   

CERTAIN BENEFICIAL OWNERS OF HEINZ COMMON STOCK

  247   

HOUSEHOLDING OF PROXY MATERIALS

  249   

LEGAL MATTERS

  250   

EXPERTS

  251   

WHERE YOU CAN FIND MORE INFORMATION

  252   

INDEX TO FINANCIAL STATEMENTS OF H.J. HEINZ HOLDING CORPORATION

  F-1   

 

Annex A Agreement and Plan of Merger, dated as of March 24, 2015, by and among Heinz, merger sub I, merger sub II and Kraft
Annex B Opinion of Centerview Partners LLC
Annex C Form of Second Amended and Restated Certificate of Incorporation of The Kraft Heinz Company
Annex D Form of Amended and Restated By-Laws of The Kraft Heinz Company
Annex E Form of Registration Rights Agreement

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a Kraft shareholder. Please refer to the section entitled “Summary” beginning on page [] of this proxy statement/prospectus and the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to in this proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

 

Q: Why am I receiving this proxy statement/prospectus and proxy card?

 

A: Kraft has agreed to combine with Heinz under the terms of the merger agreement that are described in this proxy statement/prospectus. If the merger proposal is approved by Kraft’s shareholders and the other conditions to closing the merger are satisfied or waived, at the closing of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of Heinz. At the closing of the merger, H.J. Heinz Holding Corporation will be renamed “The Kraft Heinz Company.” As a result of the merger, Kraft will no longer be a publicly held company. Following the merger, Kraft common stock will be delisted from NASDAQ and deregistered under the Exchange Act, and Kraft will no longer be required to file periodic reports with the SEC in respect of Kraft common stock.

Kraft is holding a special meeting of its shareholders to ask its shareholders to consider and vote upon a proposal to approve the merger agreement, which we refer to as the merger proposal. Kraft shareholders are also being asked (i) to consider and vote upon a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger, which we refer to as the compensation proposal, and (ii) to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve the merger agreement, which we refer to as the adjournment proposal.

This proxy statement/prospectus includes important information about the merger, the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus, and the special meeting. Kraft shareholders should read this information carefully and in its entirety. The enclosed voting materials allow shareholders to vote their shares without attending the special meeting in person.

 

Q: How does the Kraft board recommend that I vote at the special meeting?

 

A: The board of directors of Kraft, which we refer to as the Kraft board, unanimously recommends that Kraft shareholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal. See the section entitled “The Merger—Recommendation of the Kraft Board; Kraft’s Reasons for the Merger” beginning on page [] of this proxy statement/prospectus.

 

Q: What is the vote required to approve each proposal at the special meeting?

 

A: The approval of the merger proposal requires the affirmative vote of the holders of a majority of the outstanding shares of Kraft common stock entitled to vote on the matter at the special meeting. Because the affirmative vote required to approve the merger proposal is based upon the total number of outstanding shares of Kraft common stock, if you fail to submit a proxy or vote in person at the special meeting, you abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the merger proposal.

 

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The approval of each of the compensation proposal and the adjournment proposal requires the affirmative vote of the holders of a majority in voting power of the shares of Kraft common stock present in person or represented by proxy and casting votes on the matter at the special meeting (with abstentions and broker non-votes not counted as votes cast on the matter). If your shares of Kraft common stock are present at the special meeting but are not voted to approve the compensation proposal or the adjournment proposal, if you vote to abstain on the proposals, if you fail to submit a proxy or to vote in person at the special meeting or if your shares of Kraft common stock are held through a bank, brokerage firm or other nominee and you do not instruct your bank, brokerage firm or other nominee to vote your shares of Kraft common stock, your shares of Kraft common stock will not have an effect on the compensation proposal or the adjournment proposal.

 

Q: Does my vote matter?

 

A: Yes. The merger cannot be completed unless the merger proposal is approved by the Kraft shareholders. For Kraft shareholders, if you fail to submit a proxy or vote in person at the special meeting, or vote to abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote “AGAINST” the merger proposal.

See the section entitled “Information About the Special Meeting” beginning on page [] of this proxy statement/prospectus.

 

Q: What will I receive if the merger is completed?

 

A: If the merger is completed, each outstanding share of Kraft common stock (other than deferred shares and restricted shares in Kraft) will be converted into the right to receive one share of Kraft Heinz common stock. In addition, the holders of record of the outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger will each be entitled to receive a special cash dividend of $16.50 per share in respect of such shares of Kraft common stock held by them. The special cash dividend will not be paid to Kraft shareholders unless the merger is completed. It is currently expected that there will be no ex-dividend trading of shares of Kraft common stock prior to the closing of the merger with respect to the special cash dividend. The Kraft Heinz common stock to be issued to Kraft shareholders will be registered with the SEC and is expected to be listed and traded on [] under the symbol []. See the section entitled “The Merger—Merger Consideration” beginning on page [] of this proxy statement/prospectus.

 

Q: What will the capital structure of The Kraft Heinz Company be after the consummation of the merger?

Immediately prior to the consummation of the merger, pursuant to the pre-closing Heinz share conversion, each share of Heinz common stock then outstanding will be automatically reclassified and changed into 0.443332 of a share of Heinz common stock. At the effective time of the merger, all outstanding shares of Heinz common stock will be shares of Kraft Heinz common stock. At the effective time of the merger, each outstanding share of Kraft common stock (other than deferred shares and restricted shares in Kraft) will be converted into the right to receive one share of Kraft Heinz common stock. As a result of the foregoing (and after giving effect to the equity investment immediately prior to the consummation of the merger), on a fully diluted basis, approximately 51% of the outstanding Kraft Heinz common stock will be held by shareholders that were holders of Heinz common stock immediately prior to the effectiveness of the merger and approximately 49% of the Kraft Heinz common stock will be held by shareholders that were holders of Kraft common stock immediately prior to the effectiveness of the merger. The 9% Cumulative Compounding Preferred Stock, Series A, which we refer to as the Series A Preferred Stock, outstanding immediately prior to the effective time will remain outstanding following the consummation of the merger.

For more information on the pre-closing Heinz share conversion and the equity investments, see the sections entitled “The Merger—Pre-Closing Heinz Share Conversion” and “The Merger—Equity Investments” beginning on pages [] and [], respectively, of this proxy statement/prospectus.

 

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Q: How do I calculate the value of the merger consideration?

 

A: Because Heinz will issue one share of Kraft Heinz common stock in exchange for each share of Kraft common stock, the value of the merger consideration that Kraft shareholders receive will depend on the per share value of Kraft Heinz common stock at the effective time of the merger. Prior to the effective time, there has not been and will not be an established public trading for Heinz common stock. The price of the Kraft Heinz common stock at the effective time will reflect the combination of Heinz and Kraft, and will be unknown until the commencement of trading following the effective time of the merger. The exchange ratio is fixed and thus will not fluctuate up or down based on the market price of a share of Kraft common stock prior to the merger. The holders of record of the outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger will also each be entitled to receive the special cash dividend of $16.50 per share in respect of such shares of Kraft common stock held by them.

 

Q: What will holders of Kraft stock-based awards receive in the merger?

 

A: Upon completion of the merger:

 

    Each Kraft restricted share, Kraft restricted stock unit and Kraft deferred compensation unit will be converted into one Kraft Heinz restricted share, Kraft Heinz restricted stock unit or Kraft Heinz deferred compensation unit, as applicable, on the same terms and conditions as were applicable prior to completion of the merger, plus the right to receive the special dividend (in the case of restricted shares) or an amount in cash equal to the per share amount of the special dividend (in the case of restricted stock units or deferred compensation units). In the case of Kraft restricted stock units and deferred compensation units, the per share amount of the special dividend will be paid no later than 30 days following the completion of the merger. The special dividend will be paid to holders of Kraft restricted shares at the same time as it is paid to holders of Kraft common stock;

 

    Each Kraft stock option (whether vested or unvested) that is outstanding immediately prior to the completion of the merger will generally be adjusted such that, at the completion of the merger, it will be converted into an option to purchase the number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock subject to the Kraft stock option divided by the option adjustment ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of each Kraft stock option immediately prior to the completion of the merger multiplied by the option adjustment ratio (rounded up to the nearest whole cent). The Kraft Heinz stock options will continue to vest and become exercisable in accordance with the terms and conditions as were applicable under such Kraft stock options immediately prior to the completion of the merger;

 

    Each Kraft stock appreciation right (whether vested or unvested) that is outstanding immediately prior to the completion of the merger will generally be adjusted such that, at the completion of the merger, it will be converted into a stock appreciation right with respect to the number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock subject to the Kraft stock appreciation right divided by the option adjustment ratio (rounded down to the nearest whole share), at a reference price per share equal to the reference price per share of each Kraft stock appreciation right immediately prior to the completion of the merger multiplied by the option adjustment ratio (rounded up to the nearest whole cent). The Kraft Heinz stock appreciation rights will continue to vest and become exercisable in accordance with the terms and conditions as were applicable under such Kraft stock appreciation rights immediately prior to the completion of the merger;

 

    For purposes of the adjustment of Kraft stock options and stock appreciation rights, the option adjustment ratio is equal to the quotient determined by dividing (x) the closing price of Kraft Heinz common stock on the first trading day following completion of the merger by (y) the closing price of Kraft common stock on the trading day immediately prior to the trading day on which the Kraft common stock trades ex-dividend with respect to the special dividend or, if the Kraft common stock does not ever trade ex-dividend, on the trading day immediately prior to the closing of the merger, which we refer to as the final Kraft pre-dividend price;

 

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    Each Kraft performance share award will be converted into the right to receive an amount in cash equal to the target number of Kraft performance shares subject to such award immediately prior to the completion of the merger multiplied by the final Kraft pre-dividend price, which we refer to as the performance share amount. The performance share amount will be paid in two installments in the following manner: (i) a pro rata portion of the performance share amount with respect to each award, based on the number of full or partial months that have elapsed since the beginning of the applicable performance period to the completion of the merger, will be paid no later than 30 days following the completion of the merger and (ii) the remaining portion of the performance share amount with respect to each award will be paid on the earlier of (A) the first anniversary of the completion of the merger (subject to a continued service requirement) or (B) the holder’s termination of employment without cause or, if applicable, for good reason (we refer to each such type of termination as a “qualifying termination”), provided that, if the holder’s employment terminates following the completion of the merger for any reason other than due to a qualifying termination, the unpaid portion of the performance share amount will be forfeited;

 

    Each Kraft deferred share will be converted into one Kraft Heinz deferred share, which will be settled on the same terms and conditions as were applicable prior to the completion of the merger and will accrue additional deferred shares in respect of the special dividend; and

 

    The merger agreement provides that with respect to the Employee Stock Purchase Plan, which we refer to as the ESPP, (i) no offering period will commence after the offering period that commenced on April 1, 2015, (ii) no participant is entitled to begin participating in the ESPP after entry into the merger agreement, (iii) each participant’s outstanding right to purchase Kraft common stock under the ESPP will terminate on the earlier of (A) September 30, 2015 or (B) any new purchase date determined in accordance with the terms of the ESPP occurring prior to the completion of the merger; provided that (1) each participant’s accumulated payroll deduction under the ESPP will be used to purchase shares of Kraft common stock at a price determined in accordance with the terms of the ESPP and (2) Kraft will purchase all shares to be issued under the ESPP for the offering period that commenced on April 1, 2015 on the open market prior to the distribution of this proxy statement/prospectus and (iv) the ESPP will terminate prior to the completion of the merger.

 

Q: Do any of the Kraft directors or officers have interests in the merger that may differ from or be in addition to my interests as a Kraft shareholder?

 

A: Kraft’s directors and officers have certain interests in the merger that are different from, and in addition to, the interests of Kraft shareholders generally. See the section entitled “Financial Interests of Kraft’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement/prospectus.

 

Q: How will I receive the merger consideration to which I am entitled?

 

A: After receiving the proper documentation from you, following the effective time, the exchange agent for the merger will deliver to you the Kraft Heinz common stock in either certificated or book-entry form and will deliver the special cash dividend of $16.50 per share to Kraft shareholders upon receipt of an “agent’s message” in customary form.

 

Q: Will my shares of Kraft Heinz common stock acquired in the merger receive a dividend?

 

A: After the closing of the merger, as a holder of Kraft Heinz common stock, you will receive the same dividends on shares of Kraft Heinz common stock that all other holders of shares of Kraft Heinz common stock will receive with any dividend record date that occurs after the merger is completed.

You will not be entitled to be paid dividends otherwise payable on the shares of Kraft Heinz common stock into which your shares of Kraft common stock are exchangeable until you surrender your Kraft shares

 

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according to the instructions provided to you. Dividends will be accrued for you and you will receive the accrued dividends when you surrender your Kraft shares. Heinz has not historically paid any dividends on its common stock. Following the merger, the parties intend to maintain Kraft’s current quarterly cash dividend per share and expect to continue to increase it over time. However, any dividends or changes to The Kraft Heinz Company’s dividend policy will be made at the discretion of the board of directors of The Kraft Heinz Company and will depend upon many factors, including the financial condition of The Kraft Heinz Company, earnings, legal requirements, including limitations imposed by Delaware law, restrictions in the Series A Preferred Stock and restrictions in The Kraft Heinz Company’s debt agreements that limit its ability to pay dividends to shareholders and other factors the board of directors of The Kraft Heinz Company deems relevant. See the section entitled “Dividend Policy Following the Merger” beginning on page [] of this proxy statement/prospectus.

 

Q: What are the material U.S. federal income tax consequences of the merger, the subsequent merger and the special dividend to Kraft shareholders?

 

A: The obligations of Kraft, on the one hand, and Heinz, on the other hand, to complete the merger are conditioned, respectively, on Kraft’s receipt of a written opinion from Sullivan & Cromwell LLP, tax counsel to Kraft, and Heinz’s receipt of a written opinion from Cravath, Swaine & Moore LLP, tax counsel to Heinz, each to the effect that for U.S. federal income tax purposes, the merger and the subsequent merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

For U.S. federal income tax purposes, the special dividend, the merger and the subsequent merger should be treated as a single integrated transaction. As a result, both the Kraft Heinz common stock and the special dividend should be treated as received in exchange for shares of Kraft common stock pursuant to a transaction qualifying as a reorganization for U.S. federal income tax purposes. A Kraft shareholder who exchanges his or her shares of Kraft common stock for shares of Kraft Heinz common stock pursuant to the merger and receives cash in the special dividend will recognize gain, but will not recognize any loss, for U.S. federal income tax purposes. The amount of gain recognized will equal the smaller of (i) the amount of cash received in the special dividend and (ii) the excess, if any, of (x) the amount of cash received in the special dividend and the fair market value of the Kraft Heinz common stock received in the merger (determined at the effective time of the merger) over (y) the Kraft shareholder’s tax basis in the shares of Kraft common stock surrendered in the merger. Subject to the conditions and restrictions set forth in the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page [] of this proxy statement/prospectus, any recognized gain will generally be long-term capital gain if the shareholder’s holding period for the shares of Kraft common stock surrendered is more than one year at the effective time of the merger.

For more information on the U.S. federal income tax consequences of the merger, the subsequent merger and the special dividend, see the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page [] of this proxy statement/prospectus. Kraft shareholders should consult their tax advisors for a full understanding of all of the tax consequences of the merger, the subsequent merger and the special dividend to them.

 

Q: When is the merger expected to be completed?

 

A: Subject to the satisfaction or waiver of the closing conditions described under the section entitled, “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement/prospectus, including the approval of the merger proposal by Kraft shareholders at the special meeting, Heinz and Kraft expect that the merger will be completed during the second half of 2015. However, it is possible that factors outside the control of both companies could result in the merger being completed at a different time or not at all.

 

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Q: Who will serve on The Kraft Heinz Company board of directors following the merger?

 

A: Upon the closing of the merger, the board of directors of The Kraft Heinz Company will be comprised of 11 members. The members of the board are expected to be:

 

    Mr. Alexandre Behring, Mr. Jorge Paulo Lemann and Mr. Marcel Herrmann Telles (each of whom was selected by 3G Capital);

 

    Mr. Gregory Abel, Mr. Warren E. Buffett and Ms. Tracy Britt Cool (each of whom was selected by Berkshire Hathaway); and

 

    Mr. John T. Cahill, Mr. L. Kevin Cox, Ms. Jeanne P. Jackson, Mr. Mackey J. McDonald and Mr. John C. Pope (each of whom was selected by Kraft).

 

Q: Where will the headquarters of The Kraft Heinz Company be located and who will serve in senior leadership roles following the merger?

 

A: Following the merger, The Kraft Heinz Company will have co-corporate headquarters, one in the Chicago, Illinois metropolitan area and the other in Pittsburgh, Pennsylvania. Mr. Bernardo Hees, the current chief executive officer of Heinz, will continue as the chief executive officer of The Kraft Heinz Company following the merger. The rest of The Kraft Heinz Company’s executive team will be identified in due course prior to the closing of the merger.

 

Q: How will my rights as a shareholder of The Kraft Heinz Company following the merger differ from my current rights as a Kraft shareholder?

 

A: Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. As a result, the rights of Kraft shareholders who become shareholders of The Kraft Heinz Company in the merger will be governed by the laws of the State of Delaware, the new Kraft Heinz charter and the new Kraft Heinz by-laws. For more information, see the section entitled “Comparison of Rights of The Kraft Heinz Company Shareholders and Kraft Shareholders” beginning on page [] of this proxy statement/prospectus.

The new Kraft Heinz charter will, among other things, expand the number of directors from six to 11, increase the number of authorized shares of common stock from 4,000,000,000 to 5,000,000,000, increase the number of authorized shares of preferred stock from 80,000 to 1,000,000 and effectuate the pre-closing Heinz share conversion whereby each share of common stock of Heinz outstanding immediately prior to the merger will be automatically reclassified and changed into 0.443332 of a share of Heinz common stock. See the section entitled “The Merger—Amendment and Restatement of Heinz Charter and By-Laws” beginning on page [] of this proxy statement/prospectus.

 

Q: Who can vote at the Kraft special meeting?

 

A: All holders of record of Kraft common stock as of the close of business on [], 2015, the record date for the special meeting, which we refer to as the record date, are entitled to receive notice of, and to vote at, the special meeting. Each holder of Kraft common stock is entitled to cast one vote on each matter properly brought before the special meeting for each share of Kraft common stock that such holder owned of record as of the record date.

 

Q: When and where is the special meeting?

 

A:

The special meeting will be held on [], 2015 at [] [CDT], at the []. All Kraft shareholders of record as of the close of business on the record date, their duly authorized proxy holders, and beneficial owners with proof of ownership are invited to attend the special meeting in person. Due to space constraints and other

 

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  security considerations, we are not able to admit the guests of either shareholders or their legal proxy holders. To gain admittance you will need to obtain an admission ticket and you will need to bring valid photo identification, such as a driver’s license or passport, with you to the special meeting. If your shares of Kraft common stock are held through a bank, brokerage firm or other nominee, please bring proof of your beneficial ownership of such shares and legal proxy if you intend to vote at the special meeting. Acceptable proof could include an account statement showing that you owned shares of Kraft common stock on the record date. If you are the representative of a corporate or institutional shareholder, you must present valid photo identification along with proof that you are the representative of such shareholder. Please note that cameras, recording devices and other electronic devices will not be permitted at the special meeting. For additional information about the special meeting, see the section entitled “Information About the Special Meeting” beginning on page [] of this proxy statement/prospectus.

 

Q: Why am I being asked to consider and vote on a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger?

 

A: Under SEC rules, Kraft is required to seek a non-binding, advisory vote with respect to the compensation that may become payable to its named executive officers in connection with the merger.

 

Q: What will happen if Kraft shareholders do not approve this merger-related compensation?

 

A: Approval of the compensation proposal is not a condition to completion of the merger. Accordingly, you may vote against the compensation proposal and vote in favor of the merger proposal. The compensation proposal vote is an advisory vote and will not be binding on Kraft or The Kraft Heinz Company following the merger. If the merger is completed, the merger-related compensation may be paid to Kraft’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if Kraft shareholders do not approve, by non-binding advisory vote, the compensation proposal.

 

Q: What is the difference between holding shares as a shareholder of record and as a beneficial owner?

 

A: If your shares of Kraft common stock are registered directly in your name with the transfer agent of Kraft, Wells Fargo Bank, N.A., you are considered the shareholder of record with respect to those shares. As the shareholder of record, you have the right to vote, or to grant a proxy for your vote directly to Kraft or to a third party to vote, at the special meeting.

If your shares are held by a bank, brokerage firm or other nominee, you are considered the beneficial owner of shares held in “street name”, and your bank, brokerage firm or other nominee is considered the shareholder of record with respect to those shares. Your bank, brokerage firm or other nominee will send you, as the beneficial owner, a package describing the procedure for voting your shares. You should follow the instructions provided by them to vote your shares. If you are a beneficial owner of Kraft common stock, you are invited to attend the special meeting; however, you may not vote your shares held in street name in person at the special meeting unless you obtain a “legal proxy” from your bank, brokerage firm or other nominee that holds your shares, giving you the right to vote the shares at the special meeting.

 

Q: If my shares of Kraft common stock are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:

If your shares are held in “street name” in a stock brokerage account or by a bank or other nominee, your brokerage firm, bank or other nominee will only be permitted to vote your shares of Kraft common stock if you instruct it how to vote. You must provide your brokerage firm, bank or other nominee with instructions on how to vote your shares in order to vote. Please follow the voting instructions provided by your broker,

 

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  bank or other nominee. Please note that you may not vote shares held in street name by returning a proxy card directly to Kraft or by voting in person at the Kraft special meeting unless you obtain a “legal proxy”, which you must obtain from your broker, bank or other nominee.

In accordance with the rules of NASDAQ, banks, brokerage firms and other nominees who hold shares of Kraft common stock in street name for their customers have authority to vote on “routine” proposals when they have not received instructions from beneficial owners. However, banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to non-routine matters when they have not received instructions from beneficial owners. It is expected that all proposals to be voted on at the special meeting of Kraft shareholders are such “non-routine” matters. As a result, absent specific instructions from the beneficial owner of such shares, banks, brokerage firms and other nominees are not empowered to vote such shares, which we refer to as a broker non-vote. The effect of not instructing your broker how you wish your shares to be voted will be the same as a vote “AGAINST” the merger proposal, but will not have an effect on either the compensation proposal or the adjournment proposal.

 

Q: How many votes do I have?

 

A: Each Kraft shareholder is entitled to one vote for each share of Kraft common stock held of record as of the record date. As of the close of business on the record date, there were [] outstanding shares of Kraft common stock.

 

Q: What constitutes a quorum for the special meeting?

 

A: A majority of the shares of Kraft common stock issued and outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting constitutes a quorum for purposes of the special meeting. Votes to abstain and broker non-votes are counted as present for the purpose of determining whether a quorum is present. If you hold shares of Kraft common stock in “street name” and you provide your bank, brokerage firm or other nominee with instructions as to how to vote your shares or obtain a legal proxy from such bank, brokerage firm or other nominee to vote your shares in person at the special meeting, then your shares will be counted as part of the quorum.

 

Q: How do I vote my shares?

 

A: Shareholders of Record. If you are a shareholder of record, you may have your shares of Kraft common stock voted on the matters to be presented at the special meeting in any of the following ways:

 

    via the Internet at www.proxyvote.com. The Internet voting system will be available until 11:59 p.m. EDT on [], 2015;

 

    by telephone, if you are located within the United States and Canada. Call [] (toll-free) from a touch-tone telephone. The telephone voting system will be available until 11:59 p.m. EDT on [], 2015;

 

    by returning a properly executed proxy card. Kraft must receive your proxy card before the polls close at the special meeting on [], 2015; or

 

    in person at the special meeting.

Beneficial Owners. If you are a beneficial owner, you may vote:

 

    via the Internet at www.proxyvote.com (16-digit control number is required), by telephone or by returning a properly executed voting instruction form by mail, depending upon the method(s) your broker, bank or other nominee makes available; or

 

    in person at the special meeting. To do so, you must request a legal proxy from your broker, bank or other nominee and present it at the special meeting.

 

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Please be aware that if you vote by telephone or over the Internet, you may incur costs such as telephone and Internet access charges for which you will be responsible. You may be asked to provide the control number provided on your proxy card which is designed to verify your identity when voting by telephone or by Internet.

 

Q: How can I change or revoke my vote?

 

A: You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by voting again at a later date through any of the methods available to you, by attending the special meeting and voting in person, or by giving written notice of revocation to Kraft prior to the time the special meeting begins. Attendance at the meeting, in itself, will not revoke a proxy. Written notice of revocation should be mailed to: []. If you hold shares of Kraft common stock in “street name”, you should follow the instructions provided by your bank, brokerage firm or other nominee in order to change or revoke your vote.

 

Q: If a shareholder gives a proxy, how are the shares of Kraft common stock voted?

 

A: Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your shares of Kraft common stock in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your shares of Kraft common stock should be voted for or against, or you may abstain from voting on, all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy card will be voted “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal.

 

Q: What should I do if I receive more than one set of voting materials?

 

A: If you hold shares of Kraft common stock in “street name” and also directly as a record holder or otherwise or if you hold shares of Kraft common stock in more than one brokerage account, you may receive more than one set of voting materials relating to the special meeting. Please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on your proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your shares of Kraft common stock are voted. If you hold your shares in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your shares.

 

Q: What happens if I sell my shares of Kraft common stock before the special meeting?

 

A: The record date is earlier than both the date of the special meeting and the effective time of the merger. If you transfer your shares of Kraft common stock after the record date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration to the person to whom you transfer your shares. In order to become entitled to receive the merger consideration and the special cash dividend of $16.50 per share, you must hold your shares through the effective time of the merger, which Heinz and Kraft expect will occur in the second half of 2015.

 

Q: Who will solicit and pay the cost of soliciting proxies?

 

A:

Kraft has engaged Innisfree to assist in the solicitation of proxies for the special meeting. Kraft estimates that it will pay Innisfree a fee of $30,000 plus an additional nominal fee per incoming and outgoing

 

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  telephone contact. Kraft has agreed to reimburse Innisfree for certain out-of-pocket fees and expenses and also will indemnify Innisfree against certain losses, claims, damages, liabilities or expenses. Kraft also may reimburse banks, brokerage firms, other nominees or their respective agents for their expenses in forwarding proxy materials to beneficial owners of Kraft common stock. Kraft’s directors, officers and employees also may solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q: What do I need to do now?

 

A: After carefully reading and considering the information contained in this proxy statement/prospectus, please vote promptly to ensure that your shares are represented at the special meeting. If you hold your shares of Kraft common stock in your own name as the shareholder of record, you may submit a proxy to have your shares of Kraft common stock voted at the special meeting in one of four ways (described in detail in the response to the question “How do I vote my shares?”):

 

    via the Internet;

 

    by telephone;

 

    by returning a properly executed proxy card; or

 

    in person at the special meeting.

If you are a beneficial owner, you may vote:

 

    via the Internet at www.proxyvote.com, by telephone or by returning a properly executed voting instruction form by mail, depending upon the method(s) your broker, bank or other nominee makes available; or

 

    in person at the special meeting. To do so, you must request a legal proxy from your broker, bank or other nominee and present it at the special meeting.

If you decide to attend the special meeting and vote in person, your in person vote will revoke any proxy previously submitted.

 

Q: Where can I find the voting results of the special meeting?

 

A: The preliminary voting results will be announced at the special meeting. In addition, within four business days following certification of the final voting results, Kraft intends to file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q: Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my shares of Kraft common stock?

 

A: Kraft shareholders will not have appraisal rights under the VSCA with respect to the merger. For more information regarding appraisal rights, see the section entitled “No Appraisal Rights” beginning on page [] of this proxy statement/prospectus.

 

Q: Are there any risks that I should consider in deciding whether to vote for the merger proposal?

 

A: Yes. You should read and carefully consider the risks described in the section entitled “Risk Factors” beginning on page [] of this proxy statement/prospectus. You also should read and carefully consider the risk factors relating to Kraft contained in the documents that are incorporated by reference into this proxy statement/prospectus, including the Kraft Annual Report on Form 10-K for the year ended December 27, 2014.

 

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Q: What are the conditions to the completion of the merger?

 

A: In addition to approval of the merger proposal by Kraft shareholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including authorization for listing of Kraft Heinz common stock on the NYSE or the NASDAQ, receipt of required regulatory approvals, the effectiveness of the registration statement of which this proxy statement/prospectus forms a part, receipt by Heinz and Kraft of tax opinions from Cravath, Swaine & Moore LLP and Sullivan & Cromwell LLP, respectively, as to the tax treatment of the merger and the subsequent merger, the accuracy of representations and warranties under the merger agreement (subject to certain materiality exceptions), the absence of a material adverse effect on Heinz or Kraft, Heinz having obtained the equity investment and Heinz’s and Kraft’s performance of their respective obligations under the merger agreement. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement/prospectus.

 

Q: Is consummation of the merger contingent upon any future approval by the holders of Heinz common stock?

 

A: No. Concurrently with entering into the merger agreement, Heinz obtained all approvals and consents of its holders of capital stock necessary to effect the merger and the other transactions contemplated by the merger agreement, including approval of the issuance of Kraft Heinz common stock as merger consideration to the Kraft shareholders and the amendment of the Heinz charter. No further approvals by the holders of Heinz common stock are required to consummate the merger or the other transactions contemplated by the merger agreement other than those already obtained.

 

Q: What happens if the merger is not completed?

 

A: If the merger proposal is not approved by Kraft shareholders or if the merger is not completed for any other reason, Kraft shareholders will not receive shares of Kraft Heinz common stock or the special cash dividend of $16.50 per share for their shares of Kraft common stock. Instead, Kraft will remain an independent public company, Kraft common stock will continue to be listed and traded on NASDAQ and registered under the Exchange Act and Kraft will continue to file periodic reports with the SEC. If the merger agreement is terminated, under specified circumstances, Kraft may be required to pay Heinz a termination fee of $1.2 billion. See the section entitled “The Merger Agreement—Expenses and Termination Fees; Liability for Breach” beginning on page [] of this proxy statement/prospectus.

 

Q: Who can help answer any other questions I have?

 

A: If you have additional questions about the merger, need assistance in submitting your proxy or voting your shares of Kraft common stock, or need additional copies of this proxy statement/prospectus or the enclosed proxy card, please contact Innisfree, Kraft’s proxy solicitor, by calling toll-free at (877) 750-9498. Banks, brokerage firms and other nominees may call collect at (212) 750-5833.

 

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SUMMARY

The following summary highlights selected information in this proxy statement/prospectus and may not contain all the information that may be important to you as a Kraft shareholder. Accordingly, we encourage you to read carefully this entire proxy statement/prospectus, its annexes and the documents referred to herein. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

Parties to the Merger (Page [])

Kraft Foods Group, Inc.

Three Lakes Drive

Northfield, Illinois 60093

(847) 646-2000

Kraft Foods Group, Inc., a Virginia corporation, is one of the largest consumer packaged food and beverage companies in North America and worldwide with net revenues of $18.2 billion and earnings before income taxes of $1.4 billion in 2014. Kraft manufactures and markets food and beverage products, including cheese, meats, refreshment beverages, coffee, packaged dinners, refrigerated meals, snack nuts, dressings, and other grocery products, primarily in the United States and Canada, under a host of iconic brands. Kraft is headquartered in Northfield, Illinois.

Kraft common stock is listed on NASDAQ under the symbol “KRFT.”

H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

H.J. Heinz Holding Corporation, a Delaware corporation, which we refer to as Heinz, was formed in 2013 in connection with the acquisition of H. J. Heinz Company by 3G Capital and Berkshire Hathaway. For more information on the 2013 Merger, see the section entitled “The 2013 Merger” beginning on page [] of this proxy statement/prospectus.

Heinz, through its subsidiaries, manufactures and markets an extensive line of food products throughout the world. Heinz’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products. Famous for its iconic brands on six continents, Heinz provides delicious, nutritious and convenient foods for families in 200 countries around the world.

Kite Merger Sub Corp.

c/o H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

Kite Merger Sub Corp., a Virginia corporation and a wholly owned subsidiary of Heinz, was formed solely for the purpose of facilitating the merger and the other transactions contemplated by the merger agreement. We refer to Kite Merger Sub Corp. as merger sub I. Merger sub I has not carried on any activities or operations to

 

 

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date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, at the closing of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of Heinz.

Kite Merger Sub LLC

c/o H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

Kite Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Heinz, was formed solely for the purpose of facilitating the merger and the other transactions contemplated by the merger agreement. We refer to Kite Merger Sub LLC as merger sub II. Merger sub II has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, immediately after the merger, Kraft, as the corporation surviving the merger, will be merged with and into merger sub II, with merger sub II surviving the subsequent merger as a wholly owned subsidiary of Heinz.

The Merger and the Merger Agreement (Page [])

The terms and conditions of the merger are contained in the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the merger agreement carefully and in its entirety, as it is the legal document that governs the merger.

Pursuant to the merger agreement, at the closing of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of Heinz. Immediately following the effective time of the merger, Kraft, as the surviving corporation in the merger, will be merged with and into merger sub II, with merger sub II surviving the subsequent merger as a wholly owned subsidiary of Heinz. Immediately following the effective time of the subsequent merger, Heinz will engage in the internal transactions. At the closing of the merger, Heinz will be renamed “The Kraft Heinz Company.”

Following the merger, Kraft common stock will be delisted from NASDAQ, deregistered under the Exchange Act and will cease to be publicly traded.

Merger Consideration (Page [])

At the effective time of the merger, each outstanding share of Kraft common stock (other than deferred shares and restricted shares in Kraft) will be converted into the right to receive one share of Kraft Heinz common stock. In addition, the holders of record of the outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger will each be entitled to receive the special cash dividend of $16.50 per share in respect of such shares of Kraft common stock held by them. The special cash dividend will not be paid to Kraft shareholders unless the merger is completed.

Pre-Closing Heinz Share Conversion (Page [])

Pursuant to the terms of the merger agreement, immediately prior to the effective time of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. In connection with the amendment of the Heinz charter, each

 

 

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share of Heinz common stock issued and outstanding immediately prior to the effective time of the merger (including shares of Heinz common stock to be issued pursuant to the equity investment) will be reclassified and changed into 0.443332 of a share of Heinz common stock.

Post-Closing Ownership (Page [])

After giving effect to the equity investment, the pre-closing Heinz share conversion and the consummation of the merger, it is anticipated that existing Heinz shareholders will own approximately 51% of the outstanding shares of Kraft Heinz common stock and former Kraft shareholders will own approximately 49% of the outstanding shares of Kraft Heinz common stock, in each case on a fully diluted basis.

Equity Investments (Page [])

In connection with the merger, Berkshire Hathaway and 3G Global Food Holdings have committed to purchase, or cause the purchase of, newly issued Heinz common stock immediately prior to the amendment of the Heinz charter as described above (which amendment will occur immediately prior to the closing of the merger) for an aggregate purchase price of $10 billion. Each of their respective commitments is subject to the satisfaction or waiver by Heinz, on or before the closing of the merger, of all of the conditions precedent to Heinz’s obligations to consummate the merger, as well as to the concurrent funding of the other’s commitment.

For more information on the equity investments, see the section entitled “The Merger—Equity Investments” beginning on page [] of this proxy statement/prospectus.

Governance of The Kraft Heinz Company Following the Merger (Page [])

Name of Company; Headquarters

Heinz and Kraft have agreed that:

 

    At the effective time of the merger, the name of H.J. Heinz Holding Corporation will be changed to “The Kraft Heinz Company” and the name of H. J. Heinz Company, which is H.J. Heinz Holding Corporation’s principal operating subsidiary, will be changed to a name to be agreed upon between Heinz and Kraft, consistent with the naming convention of “The Kraft Heinz Company”; and

 

    The Kraft Heinz Company will have co-corporate headquarters, one in the Chicago, Illinois metropolitan area and the other in Pittsburgh, Pennsylvania.

Board of Directors

Heinz and Kraft have agreed that, at the effective time of the merger:

The board of directors of The Kraft Heinz Company will be comprised of 11 members. The members of the board are expected to be:

 

    Mr. Alexandre Behring, Mr. Jorge Paulo Lemann and Mr. Marcel Herrmann Telles (each of whom was selected by 3G Capital);

 

    Mr. Gregory Abel, Mr. Warren E. Buffett and Ms. Tracy Britt Cool (each of whom was selected by Berkshire Hathaway); and

 

    Mr. John T. Cahill, Mr. L. Kevin Cox, Ms. Jeanne P. Jackson, Mr. Mackey J. McDonald and Mr. John C. Pope (each of whom was selected by Kraft).

 

 

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Mr. Alexandre Behring will serve as chairman of the combined company board of directors.

Mr. John T. Cahill will serve as vice chairman of the combined company board of directors.

The board of directors of the combined company will have an Operations and Strategy Committee comprised of three members, including Mr. John T. Cahill (who will be the Chair of the Operations and Strategy Committee), and two members selected by Heinz with one such member being affiliated with 3G Capital and the other with Berkshire Hathaway. In addition, the board of directors of The Kraft Heinz Company following the merger will have a standing audit committee, a compensation committee and a nominating and corporate governance committee. Mr. John C. Pope will serve as chair of the audit committee of the board of directors of The Kraft Heinz Company.

There are no agreements between Kraft and Heinz regarding, and no decisions have been made with respect to, the selection of directors of The Kraft Heinz Company following the merger, other than the selection of directors to serve on the initial board of directors upon the closing of the merger. 3G and Berkshire Hathaway will enter into a shareholders’ agreement upon the closing of the merger that will govern how each party and their affiliates will vote the shares of Kraft Heinz common stock held by them as of the date of closing of the merger with respect to supporting certain directors that are nominated by the board of directors of the combined company and designated for support by either 3G Global Food Holdings or Berkshire Hathaway. See the section entitled “Other Related Agreements—Shareholders’ Agreement” beginning on page [] of this proxy statement/prospectus.

Management

Heinz and Kraft expect that following the merger Mr. Bernardo Hees will continue as Chief Executive Officer of The Kraft Heinz Company. The rest of The Kraft Heinz Company’s executive team will be identified in due course prior to the closing of the merger.

Substantial Control by the Sponsors

Appointees of the Sponsors will constitute a majority of the board of directors at closing, and, to the extent they act together, the Sponsors will have substantial control over any action requiring the approval of the holders of Kraft Heinz common stock, including, among other things, adopting amendments to the new Kraft Heinz charter, electing directors and approving mergers or sales of substantially all of the combined company’s assets. In addition, to the extent that the Sponsors collectively hold a majority of Kraft Heinz common stock, which they may hold on or after the closing of the merger, they would together have the power to take shareholder action by written consent to adopt amendments to the new Kraft Heinz charter or take other actions that require the vote of holders of a majority of the outstanding common stock. Except for their obligations under a shareholders agreement that will be entered into upon the closing of the merger to vote in favor of and not vote to remove certain directors that are nominated by the board of directors of the combined company and designated for support by the other party, there are no agreements or understandings between 3G and Berkshire Hathaway with respect to the voting by directors or the voting of shares on any matter. See the section entitled “Description of Kraft Heinz Common Stock” beginning on page [] of this proxy statement/prospectus and the section entitled “Other Related Agreements—Shareholders’ Agreement” beginning on page [] of this proxy statement/prospectus.

Recommendation of the Kraft Board; Kraft’s Reasons for the Merger (Page [])

After careful consideration, on March 24, 2015 the Kraft board unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby. Accordingly, the Kraft board unanimously recommends that the Kraft shareholders vote (i) “FOR” approval of the merger agreement and (ii) “FOR” all other proposals described in this proxy statement/prospectus submitted for shareholder approval in connection with the merger agreement. For more information on Kraft’s reasons for the merger and the recommendation of the Kraft board, see the section entitled “Recommendation of the Kraft Board; Kraft’s Reasons for the Merger.”

 

 

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Opinion of Kraft’s Financial Advisor (Page [])

Kraft retained Centerview Partners LLC, which is referred to in this proxy statement/prospectus as Centerview, as financial advisor to the Kraft board in connection with the merger and the other transactions contemplated by the merger agreement (the merger, the subsequent merger, the pre-closing Heinz share conversion, and the other transactions contemplated by the merger agreement are collectively referred to throughout this section and the summary of Centerview’s opinion below under the section entitled “Opinion of Kraft’s Financial Advisor” as the Transaction). In connection with this engagement, the Kraft board requested that Centerview evaluate the fairness, from a financial point of view, to the holders of the Kraft common stock (other than Kraft deferred shares, Kraft restricted shares and any shares of the Kraft common stock held by Heinz or any of its affiliates, which are collectively referred to as Excluded Shares throughout this section and the summary of Centerview’s opinion below under the section entitled “Opinion of Kraft’s Financial Advisor”) of the Merger Consideration (as defined in the merger agreement) taken together (and not separately) with the special dividend (the Merger Consideration, taken together (and not separately) with the special dividend, is referred to as the Consideration). On March 24, 2015, Centerview rendered to the Kraft board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated as of such date, to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in Centerview’s written opinion, the Consideration proposed to be paid to the holders of the Kraft common stock (other than Excluded Shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated March 24, 2015, which describes the various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Kraft board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transaction and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of the Kraft common stock (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the Transaction and does not constitute a recommendation to any shareholder of Kraft or any other person as to how such shareholder or other person should vote with respect to the merger or otherwise act with respect to the Transaction or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety.

Information About the Special Meeting (Page [])

The special meeting will be held at the [], on [], 2015 at [], [CDT]. The special meeting is being held in order to vote on:

 

    the merger proposal;

 

    the compensation proposal; and

 

    the adjournment proposal.

Completion of the merger is conditioned on approval of the merger proposal. However, approval of the compensation proposal and approval of the adjournment proposal are not conditions to the obligation of either Heinz or Kraft to complete the merger.

Only holders of record of issued and outstanding shares of Kraft common stock as of the close of business on [], 2015, the record date for the special meeting, are entitled to notice of, and to vote at, the special meeting

 

 

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or any adjournment or postponement of the special meeting. You may cast one vote for each share of Kraft common stock that you owned as of the record date.

Approval of the merger proposal requires the affirmative vote of a majority of the shares of Kraft common stock outstanding as of the close of business on the record date. Shares not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the merger proposal.

For the compensation proposal and the adjournment proposal to be approved, votes cast “FOR” each proposal must exceed votes cast “AGAINST.” Shares present and not voted, whether by broker non-vote, abstention or otherwise, will be counted as neither “FOR” nor “AGAINST” and will not have an effect on the compensation proposal or the adjournment proposal.

As of the close of business on the record date for the special meeting, there were [] shares of Kraft common stock outstanding and entitled to vote. As of the same date, the directors and executive officers of Kraft as a group owned and were entitled to vote [] shares of Kraft common stock, representing approximately []% of the total issued and outstanding shares of Kraft common stock on that date. Approval of the merger proposal requires the affirmative vote of a majority of the total issued and outstanding shares of Kraft common stock on the same date. Kraft currently expects that all directors and executive officers will vote their shares in favor of each of the proposals to be considered at the special meeting, although none of them has entered into any agreement obligating them to do so.

Financial Interests of Kraft’s Directors and Executive Officers in the Merger (Page [])

In considering the recommendation of the Kraft board with respect to the merger proposal, Kraft shareholders should be aware that the executive officers and directors of Kraft have certain interests in the merger that are different from, and in addition to, the interests of Kraft shareholders generally. The Kraft board was aware of these interests and considered them, among other matters, in approving the merger agreement and the transactions contemplated thereby and making its recommendation that Kraft shareholders vote in favor of the merger proposal. These interests include, among others:

 

    under the merger agreement, Kraft stock-based awards (including those held by the executive officers) other than performance share awards will convert into Heinz stock-based awards of the corresponding type (subject to existing terms and conditions, including accelerated vesting of unvested awards on a qualifying termination following the merger), and may, depending on the type of award, receive the per-share amount of the special dividend or a cash payment or dividend equivalent in respect thereof;

 

    each Kraft performance share award (including those held by the executive officers) will be converted into the right to receive a cash payment equal to the target number of Kraft performance shares subject to each such award immediately prior to the completion of the merger multiplied by the final Kraft pre-dividend price, payable in two installments;

 

    The Kraft Heinz Company will pay an annual cash performance bonus for 2015 to eligible Kraft employees (including the executive officers);

 

    employees of Kraft (including the executive officers) are eligible to receive retention awards (as of the date of this proxy statement/prospectus, no determinations have been made as to whether any executive officer will receive an award or the amounts of any such potential awards);

 

    the Kraft Change in Control Plan for Key Executives, which we refer to as the CIC Plan, provides severance benefits to participants (including the executive officers) upon qualifying terminations following the merger; and

 

    Kraft’s directors and executive officers are entitled to continued indemnification and insurance coverage under the merger agreement.

 

 

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Under the terms of the Kraft Foods Group, Inc. 2012 Performance Incentive Plan, which we refer to as the Kraft Stock Plan, vesting of unvested stock-based awards held by employees, including Kraft’s executive officers, would accelerate upon a qualifying termination on or within two years following the merger. As of April 1, 2015, which is the assumed date of the closing of the merger solely for the purposes of this summary, Kraft’s executive officers as a group held unvested stock-based awards with the following estimated values (based on a price per Kraft common share of $86.88, which is the average closing market price per Kraft common share as quoted on the NASDAQ over the five business days following the first public announcement of the merger, commencing on March 25, 2015): restricted stock units—$13,221,225, stock options—$17,172,693 and performance-based restricted shares—$20,831,131. The aggregate pro rata amount in respect of 2015 annual bonuses that would be payable to Kraft’s executive officers as a group as of the assumed closing date of the merger on April 1, 2015 based on target performance is $1,611,533, and Kraft’s executive officers as a group would receive approximately $23,381,237 upon a qualifying termination under the CIC Plan on such date. See the section entitled “Advisory Vote on Merger-Related Compensation for Kraft’s Named Executive Officers” beginning on page [] of this proxy statement/prospectus for other assumptions used to calculate these estimates and see the section entitled “Financial Interests of Kraft Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement/prospectus for additional details regarding these interests.

Regulatory Approvals (Page [])

Completion of the merger is subject to the receipt of certain required regulatory approvals, including the receipt of antitrust clearance in the United States and Canada. With respect to United States antitrust clearance, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, and the rules promulgated thereunder, the merger may not be completed until notification and report forms have been filed with the Federal Trade Commission, which we refer to as the FTC, and the Department of Justice, which we refer to as the DOJ, and the applicable waiting period (or any extensions thereof) has expired or been terminated. Regarding Canadian antitrust clearance, the merger may not be completed until Heinz has received an Advance Ruling Certificate, which we refer to as an ARC, pursuant to Section 102 of the Competition Act (Canada), or the applicable waiting period (or any extension thereof) under the Competition Act has expired, been terminated or waived and Heinz has received a letter from the Canadian Commissioner of Competition, which we refer to as a no action letter, indicating that he does not, at that time, intend to challenge the transaction.

On April 6, 2015, 3G Special Situations Fund III, L.P., Berkshire Hathaway and Kraft filed with the FTC and the DOJ notification and report forms under the HSR Act with respect to the proposed merger. The waiting period with respect to the notification and report forms filed under the HSR Act expires 30 calendar days after such filings, unless otherwise extended or terminated. On May 6, 2015, 3G Special Situations Fund III, L.P. and Berkshire Hathaway voluntarily withdrew their notification and report forms under the HSR Act and refiled such forms on May 8, 2015, thereby extending the waiting period for an additional 30 calendar days from the date of refiling.

On April 15, 2015, Heinz and Kraft filed with the Canadian Competition Bureau their respective notifications under the Competition Act with respect to the proposed merger and Heinz filed an application for an ARC or no action letter. On May 15, 2015, prior to the expiry of the waiting period under the Competition Act, the Canadian Competition Bureau issued a Supplementary Information Request, which has the effect of extending the waiting period for a period that will expire 30 calendar days after a complete response to the Supplementary Information Request is provided to the Canadian Competition Bureau (unless such waiting period is terminated early).

Heinz and Kraft have agreed to take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other in doing, all things necessary to avoid or eliminate each and every legal impediment that may be asserted under antitrust law so as to enable the parties to the merger agreement to consummate and make effective, as promptly as practicable, the merger and the other transactions contemplated by the merger

 

 

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agreement in accordance with its terms. However, Heinz and Kraft and their respective subsidiaries are not required under the merger agreement to agree to or otherwise be required to commit to, execute or consummate any sale, divestiture, disposition or arrangement if doing so would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition of Heinz, Kraft and their respective subsidiaries, taken as a whole. Further, the parties are not required to agree to any such actions with respect to the business or operations of Heinz or Kraft and their respective subsidiaries unless their effectiveness is conditioned on the closing of the merger. 3G Capital, Berkshire Hathaway and their respective affiliates (other than Heinz and its subsidiaries) will not be required to sell, divest or dispose of, or enter into any other arrangements or take any other similar remedy action with respect to, their assets, properties or businesses pursuant to the merger agreement.

No Appraisal Rights (Page [])

Kraft shareholders will not have appraisal rights under the VSCA with respect to the merger.

Listing of Kraft Heinz Common Stock on the [] (Page [])

Heinz common stock is not currently traded or quoted on a stock exchange or quotation system. At the closing of the merger, The Kraft Heinz Company will become a publicly traded company and the Kraft Heinz common stock is expected to be listed on the [] under the symbol [].

Conditions to Completion of the Merger (Page [])

The obligations of Heinz, merger sub I, merger sub II and Kraft to effect the merger are subject to the satisfaction or waiver by each of the parties to the merger agreement of the following conditions at or prior to the effective time:

 

    approval of the merger proposal by affirmative vote of holders of a majority of the outstanding shares of Kraft common stock entitled to vote at the special meeting;

 

    authorization for the listing on NASDAQ or NYSE of the shares of Kraft Heinz common stock to be issued to Kraft shareholders in the merger, subject to official notice of issuance;

 

    obtaining required regulatory approvals;

 

    effectiveness of the registration statement of which this proxy statement/prospectus forms a part and no stop order suspending the effectiveness of the registration statement having been issued or proceedings for that purpose having been initiated or threatened by the SEC; and

 

    no material order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement being in effect.

In addition, Heinz’s obligation to effect the merger is subject to the satisfaction or waiver of the following conditions at or prior to the effective time:

 

    the representations and warranties of Kraft being true and correct to the extent required, and subject to the applicable materiality standards set forth in, the merger agreement, together with the receipt by Heinz of a certificate executed by Kraft’s chief executive officer or chief financial officer to such effect;

 

    Kraft having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger, together with the receipt by Heinz of a certificate executed by Kraft’s chief executive officer or chief financial officer to such effect;

 

 

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    receipt by Heinz of a tax opinion from Cravath, Swaine & Moore LLP, tax counsel to Heinz, as to the tax treatment of the merger and the subsequent merger; and

 

    the absence of a material adverse effect on Kraft.

In addition, Kraft’s obligation to effect the merger is subject to the satisfaction or waiver of the following conditions at or prior to the effective time:

 

    the representations and warranties of Heinz being true and correct to the extent required, and subject to the applicable materiality standards set forth in, the merger agreement, together with the receipt by Kraft of a certificate executed by Heinz’s chief executive officer or chief financial officer to such effect;

 

    Heinz having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger, together with the receipt by Kraft of a certificate executed by Heinz’s chief executive officer or chief financial officer to such effect;

 

    receipt by Kraft of a tax opinion from Sullivan & Cromwell LLP, tax counsel to Kraft, as to the tax treatment of the merger and the subsequent merger;

 

    the absence of a material adverse effect on Heinz; and

 

    Heinz having obtained the equity investment on the terms described in the equity investment letters.

For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement/prospectus.

No Solicitation or Negotiation of Acquisition Proposals (Page [])

Kraft has agreed that it will not, and it will cause its subsidiaries and its, their and its controlled affiliates’ respective directors, officers and employees and investment bankers, financial advisors, attorneys, accountants and other advisors, agents and representatives retained in connection with the merger and the other transactions contemplated by the merger agreement, which we refer to as transaction representatives, and will use its reasonable best efforts to cause its other investment bankers, financial advisors, attorneys, accountants and other advisors, agents and representatives, which we refer to as other representatives, not to, and on becoming aware of it will use its best effort to stop any such persons from continuing to, directly or indirectly:

 

    solicit, initiate or knowingly facilitate any inquiries, proposals or offers that constitute, or that would reasonably be expected to lead to, a takeover proposal (as defined in the section entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus);

 

    engage or otherwise participate in any discussions or negotiations regarding, or furnish to any person any non-public information in connection with, or for the purposes of facilitating, any inquiries, proposals or offers that constitute, or that would reasonably be expected to lead to, a takeover proposal; or

 

    execute or enter into any acquisition agreement (as defined in the section entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus).

The merger agreement requires that Kraft promptly notify Heinz of the receipt of any takeover proposal and identify the person or group making the takeover proposal. In addition, Kraft is required to provide to Heinz an unredacted copy of the takeover proposal, if made in writing, and a written summary of all material terms and conditions of any such takeover proposal, to the extent not made in writing.

 

 

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Alternative Proposals

Notwithstanding these restrictions, prior to the approval of the merger proposal by Kraft’s shareholders, Kraft may, after providing notice to Heinz:

 

    enter into an acceptable confidentiality agreement (as defined in the section entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus) and furnish information with respect to Kraft and its subsidiaries to a person or group making a takeover proposal not resulting in any material respect from a breach of the non-solicitation provisions of the merger agreement; and

 

    engage in or otherwise participate in discussions with the person or group making the takeover proposal,

in each case if the Kraft board determines in good faith (after consultation with its outside counsel and financial advisors):

 

    that such takeover proposal constitutes or is reasonably likely to lead to a superior proposal (as defined in the section entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus); and

 

    that the failure to take either such action would be reasonably likely to be inconsistent with the fiduciary duties of the Kraft board under applicable law.

No Change in Recommendation or Alternative Acquisition (Page [])

Subject to certain exceptions described below, neither the Kraft board nor any committee thereof will:

 

    withhold, withdraw or modify in a manner adverse to Heinz the recommendation to Kraft shareholders that they vote in favor of the approval of the merger proposal at the special meeting;

 

    approve or recommend, or publicly propose to approve or recommend, any takeover proposal;

 

    refrain from recommending against any takeover proposal that is a tender offer or an exchange offer within ten business days after it commences (we refer to any of these first three bullets as an adverse recommendation change); or

 

    enter into or propose publicly to execute or enter into (or cause or permit Kraft or any of its subsidiaries to execute or enter into or propose publicly to execute or enter into) an acquisition agreement.

Kraft may, however, make an adverse recommendation change or terminate the merger agreement and enter into an acquisition in respect of a takeover proposal, if the Kraft board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that to do otherwise would be reasonably likely to be inconsistent with its fiduciary duties under applicable law and, if such action is being taken in response to a takeover proposal, that such takeover proposal constitutes a superior proposal. Prior to any such action being taken, Kraft must provide written notice to Heinz advising Heinz that the Kraft board (or any committee thereof) intends to take such action and the reasons therefor and take the other actions described in the section entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus, including negotiating, at the request of Heinz, in good faith with respect to any changes to the terms of the merger agreement during a four business day period after delivery of such written notice. For any such termination to be valid under the merger agreement, Kraft must pay Heinz a termination fee of $1.2 billion prior to, or substantially concurrently with, entering into an acquisition agreement in respect of such takeover proposal.

 

 

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Termination of the Merger Agreement (Page [])

The merger agreement may be terminated at any time by Heinz or Kraft prior to the effective time of the merger under the following circumstances:

 

    by mutual written consent;

 

    if any governmental entity issues a final and nonappealable order permanently enjoining or otherwise prohibiting the consummation of the merger or the other transactions contemplated by the merger agreement;

 

    if the Kraft shareholders fail to approve the merger proposal at the special meeting;

 

    if the merger is not consummated by March 31, 2016; and

 

    subject to cure rights, if there shall have been a breach of any of the covenants or agreements or any inaccuracy of any of the representations or warranties of the other party, such that the conditions to the terminating party’s obligations to complete the merger would not be satisfied.

In addition, the merger agreement may be terminated:

 

    by Heinz if, prior to obtaining the approval of the Kraft shareholders of the merger proposal at the special meeting, the Kraft board or any committee thereof makes an adverse recommendation change; or

 

    by Kraft at any time prior to obtaining the approval of the Kraft shareholders of the merger proposal at the special meeting in connection with entering into an acquisition agreement with a third party in compliance with the non-solicitation provisions of the merger agreement, with Kraft paying the termination fee prior to or substantially concurrently with entering into such acquisition agreement.

Termination Fees and Expenses (Page [])

Kraft will be obligated to pay a termination fee of $1.2 billion to Heinz if:

 

    (i) a bona fide takeover proposal is made directly to Kraft’s shareholders or any person has publicly announced a takeover proposal or any takeover proposal otherwise becomes publicly known after the date of the merger agreement and prior to the special meeting and thereafter, (ii) the merger agreement is terminated (a) by either Heinz or Kraft following the failure of Kraft shareholders to approve the merger proposal at the special meeting or any adjournment or postponement thereof at which the vote was taken or the failure to consummate the merger on or before the end date, or (b) by Heinz for a breach of any of the covenants or agreements or any inaccuracy of any of the representations or warranties of Kraft, which breach or inaccuracy, either individually or in the aggregate, would result in failure of the conditions of Heinz’s obligation to consummate the merger relating to the performance of such covenants or accuracy of such representation or warranties and (iii) Kraft enters into a definitive agreement with respect to a transaction contemplated by a takeover proposal or consummates a takeover proposal within 12 months of the date the merger agreement is terminated (for purposes of this clause (iii), each reference in the definition of “takeover proposal” to “20% or more” being deemed to be “more than 35%”, in the event the definitive agreement or transaction in respect of such takeover proposal is entered into or consummated, as applicable, with the same person (or any of its affiliates) that made or announced the takeover proposal that is referenced in clause (i) of this paragraph or “more than 50%”, if otherwise);

 

    Kraft terminates the merger agreement at any time prior to obtaining the approval of the Kraft shareholders of the merger agreement in connection with entering into an acquisition agreement with a third party; or

 

 

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    Heinz terminates the merger agreement because, prior to obtaining the approval of the Kraft shareholders of the merger agreement, the Kraft board of any committee thereof makes an adverse recommendation change (except where such adverse recommendation change was made as a result of a material adverse effect on Heinz and no takeover proposal had been then received by Kraft or any of its subsidiaries).

In the event that the merger agreement is terminated by Heinz following the failure of Kraft shareholders to approve the merger proposal at the special meeting or any adjournment or postponement thereof at which the vote was taken, Kraft will be obligated to pay Heinz the reasonable and documented out-of-pocket fees and expenses incurred by Heinz, merger sub I and merger sub II, or on their behalf, in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, any filings or submissions made under antitrust or other laws, and any other matters related to the merger and the transactions contemplated by the merger agreement, up to a maximum amount of $15 million.

Other Related Agreements (Page [])

Registration Rights Agreement

In connection with the merger and the transactions contemplated by the merger agreement, at the closing of the merger, The Kraft Heinz Company will enter into a registration rights agreement with 3G Global Food Holdings and Berkshire Hathaway. Pursuant to the registration rights agreement, The Kraft Heinz Company will grant 3G Global Food Holdings and Berkshire Hathaway registration rights with respect to the shares of Kraft Heinz common stock held by 3G Global Food Holdings and Berkshire Hathaway as of the date of the closing of the merger, representing (i) shares of Kraft Heinz common stock acquired from Heinz in connection with the merger and the transactions contemplated thereby, including the equity investment and, (ii) in the case of Berkshire Hathaway, shares of Kraft Heinz common stock issuable upon the exercise of the warrant held by Berkshire Hathaway, which we refer to as the Berkshire warrant (we refer to (i) and (ii) together as registrable shares). The registration rights only apply to registrable shares. These rights will include demand registration rights, shelf registration rights and “piggyback” registration rights, as well as customary indemnification. The registration rights are subject to certain holdback and suspension periods. All fees, costs and expenses related to registrations generally will be borne by The Kraft Heinz Company, other than underwriting discounts and commissions attributable to the sale of shares of Kraft Heinz common stock by 3G Global Food Holdings and Berkshire Hathaway, as applicable. See the section entitled “Other Related Agreements—Registration Rights Agreement” beginning on page [] of this proxy statement/prospectus.

Shareholders’ Agreement

Following the merger, 3G Global Food Holdings and Berkshire Hathaway will enter into a shareholders’ agreement that will govern how each party and their affiliates will vote their shares of Kraft Heinz common stock upon the closing of the merger with respect to supporting certain directors that are nominated by the board of directors of the combined company and designated for support by each of 3G Global Food Holdings and Berkshire Hathaway. Each of 3G Global Food Holdings and Berkshire Hathaway will agree that they will vote such shares for directors selected by the other party, and not act to remove any such director selected by the other party, without the other party’s consent. Initially, the number of directors that each party to the shareholders’ agreement shall have the right to select will be three, with step-downs based on the voting power of such shares of common stock that remain held by a party. The shareholders’ agreement will provide that neither 3G Global Food Holdings nor Berkshire Hathaway will transfer such shares to their respective affiliates unless such affiliate agrees to be bound by the shareholders’ agreement. See the section entitled “Other Related Agreements—Shareholders’ Agreement” beginning on page [] of this proxy statement/prospectus.

Accounting Treatment (Page [])

Heinz prepares its financial statements in accordance with GAAP. The merger will be accounted for using the acquisition method of accounting. Heinz will be treated as the acquiror for accounting purposes.

 

 

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Material U.S. Federal Income Tax Consequences of the Merger, the Subsequent Merger and the Special Dividend (Page [])

The obligations of Kraft, on the one hand, and Heinz, on the other hand, to complete the merger are conditioned, respectively, on Kraft’s receipt of a written opinion from Sullivan & Cromwell LLP, tax counsel to Kraft, and Heinz’s receipt of a written opinion from Cravath, Swaine & Moore LLP, tax counsel to Heinz, each to the effect that for U.S. federal income tax purposes, the merger and the subsequent merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Code.

For U.S. federal income tax purposes, the special dividend, the merger and the subsequent merger should be treated as a single integrated transaction. As a result, both the Kraft Heinz common stock and the special dividend should be treated as received in exchange for shares of Kraft common stock pursuant to a transaction qualifying as a reorganization for U.S. federal income tax purposes. A Kraft shareholder who exchanges his or her shares of Kraft common stock for shares of Kraft Heinz common stock pursuant to the merger and receives cash in the special dividend will recognize gain, but will not recognize any loss, for U.S. federal income tax purposes. The amount of gain recognized will equal the smaller of (i) the amount of cash received in the special dividend and (ii) the excess, if any, of (x) the amount of cash received in the special dividend and the fair market value of the Kraft Heinz common stock received in the merger (determined at the effective time of the merger) over (y) the Kraft shareholder’s tax basis in the shares of Kraft common stock surrendered in the merger.

The discussion of the material U.S. federal income tax consequences contained in this proxy statement/prospectus is intended to provide only a general summary and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger, the subsequent merger and the special dividend. The discussion does not address tax consequences that may vary with, or are dependent on, individual circumstances. In addition, it does not address the effects of any foreign, state or local tax laws. For more information on the U.S. federal income tax consequences of the merger, the subsequent merger and the special dividend, see the section entitled “Material U.S. Federal Income Tax Consequences” beginning on page [] of this proxy statement/prospectus.

Kraft shareholders are strongly urged to consult with their tax advisors regarding the tax consequences of the merger, the subsequent merger and the special dividend to them, including the effects of U.S. federal, state and local, foreign and other tax laws.

Federal Securities Law Consequences (Page [])

All Kraft Heinz common stock received by Kraft shareholders upon consummation of the merger will be freely tradable without restriction under the Securities Act, except that Kraft Heinz common stock received in the merger by persons who become affiliates of The Kraft Heinz Company for purposes of Rule 144 under the Securities Act may be resold by them only in transactions permitted by Rule 144, or as otherwise permitted under the Securities Act.

Debt Matters (Page [])

As of the date of this proxy statement/prospectus, Kraft had approximately $10 billion of long-term indebtedness outstanding. Kraft is also party to the Kraft revolving credit facility. There were no amounts drawn under the Kraft revolving credit facility as of the date of this proxy statement/prospectus.

The merger agreement provides that Kraft may refinance, prepay, repurchase or redeem any indebtedness falling due prior to the closing date, on such terms as will be determined by Kraft in its sole discretion after reasonable consultation with Heinz. Heinz and Kraft have also agreed in the merger agreement to use their respective reasonable best efforts to cooperate in connection with the refinancing of this indebtedness. In addition, the merger agreement also provides that all amounts outstanding under the Kraft revolving credit facility, if any, will be repaid on the closing date.

 

 

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As of the date of this proxy statement/prospectus, Heinz had approximately $14 billion of long-term indebtedness outstanding. Heinz intends to refinance, on or prior to the closing date, all of its outstanding indebtedness under the Heinz credit agreement and the Heinz 2020 notes and $800 million in aggregate principal amount of the Heinz 2025 notes. The merger agreement provides that Kraft will use its reasonable best efforts to provide reasonable cooperation with Heinz in arranging and consummating any refinancing that Heinz deems reasonably necessary or advisable in connection with the transactions contemplated by the merger agreement.

Closing of the merger is not subject to any debt financing condition or contingency.

For more information on debt matters, see the section entitled “The Merger—Debt Matters” beginning on page [] of this proxy statement/prospectus.

Amendment and Restatement of Heinz Charter and By-Laws (Page [])

Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. We refer to these as the new Kraft Heinz charter and the new Kraft Heinz by-laws. The new Kraft Heinz charter will, among other things, expand the number of directors from six to 11, increase the number of authorized shares of common stock from 4,000,000,000 to 5,000,000,000, increase the number of authorized shares of preferred stock from 80,000 to 1,000,000 and effectuate the pre-closing Heinz share conversion whereby each share of Heinz common stock outstanding immediately prior to the merger will be automatically reclassified and changed into 0.443332 of a share of Heinz common stock.

Comparison of Rights of The Kraft Heinz Company Shareholders and Kraft Shareholders (Page [])

The rights of Kraft shareholders are governed by Kraft’s amended and restated articles of incorporation, which we refer to as the Kraft charter, by Kraft’s amended and restated by-laws, which we refer to as the Kraft by-laws, and by the VSCA. Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. As a result, your rights as a shareholder of The Kraft Heinz Company following the merger will be governed by the new Kraft Heinz charter, by the new Kraft Heinz by-laws and by the DGCL. Your rights under the new Kraft Heinz charter, the new Kraft Heinz by-laws and the DGCL will differ in certain material respects from your rights under the Kraft charter, the Kraft by-laws and the VSCA. For more detailed information regarding a comparison of your rights as a shareholder of Kraft and as a shareholder of The Kraft Heinz Company, see the section entitled “Comparison of Rights of The Kraft Heinz Company Shareholders and Kraft Shareholders” beginning on page [] of this proxy statement/prospectus.

Litigation Related to the Merger (Page [])

The Kraft board has received two demand letters from purported shareholders alleging that the Kraft board breached its fiduciary duties in connection with its approval of the merger and demanding that the Kraft board conduct an investigation and take other actions. The Kraft board has established a committee, which is reviewing and investigating the allegations with the assistance of independent counsel.

Five putative class actions challenging the merger have been filed on behalf of purported Kraft shareholders - four in the United States District Court for the Eastern District of Virginia and one in the United States District Court for the Northern District of Illinois. On April 27, 2015, a putative class action was filed by Steven Leitz in the United States District Court for the Eastern District of Virginia; on May 6, 2015, a putative class action was filed by John Klocke and Michael Reed in the United States District Court for the Eastern District of Virginia; on May 13, 2015, a putative class action was filed by Brendan Foote in the United States District Court for the Northern District of Illinois; on May 14, 2015, a putative class action was filed by

 

 

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Robert Meyer in the United States District Court for the Eastern District of Virginia; and on May 14, 2015, a putative class action was filed by Sam Wietschner & Tova Wietschner TRS for Sam Wietschner Pension Plan UA April 1, 1990 in the United States District Court for the Eastern District of Virginia. Additionally, Tova Samouha, a purported shareholder of Kraft, filed a derivative lawsuit in the Henrico County Circuit Court in Virginia on May 1, 2015.

The plaintiffs in these matters allege, among other things, that (i) the registration statement of which this proxy statement/prospectus forms a part contains material omissions and misleading statements, (ii) the members of the Kraft board breached their fiduciary duties in connection with the proposed merger and (iii) Heinz and abetted the Kraft board in its alleged breaches of fiduciary duty. The plaintiffs seek, among other things, injunctive relief and damages.

Kraft and Heinz believe that each of these actions is without merit and intend to defend them vigorously.

For more detailed information regarding litigation relating to the merger see the section entitled “Litigation Related to the Merger beginning on page [] of this proxy statement / prospectus.

 

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The registration statement on Form S-4 of which this proxy statement/prospectus forms a part, and the documents to which Heinz and Kraft refer you to in the registration statement as well as oral statements made or to be made by Heinz and Kraft, include certain “forward-looking statements” within the meaning of federal securities laws with respect to the businesses, strategies and plans of Heinz and Kraft, their expectations relating to the merger and their future financial condition and performance. Statements included in or incorporated by reference into the registration statement, of which this proxy statement/prospectus forms a part, that are not historical facts, including statements about the beliefs and expectations of the management of each of Heinz and Kraft, are forward-looking statements. Words such as “believes”, “plans”, “anticipates”, “estimates”, “expects”, “intends”, “aims”, “potential”, “will”, “would”, “could”, “considered”, “likely”, “estimate” and variations of these words and similar future or conditional expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. While Heinz and Kraft believe these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the control of Heinz and Kraft. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur. Actual results may differ materially from the current expectations of Heinz and Kraft depending upon a number of factors affecting their businesses and risks associated with the successful execution of the merger and the integration and performance of their businesses following the merger. These factors include, but are not limited to, risks and uncertainties detailed in Kraft’s periodic public filings with the SEC, including those discussed in the section of this proxy statement/prospectus entitled “Risk Factors” and in the sections entitled “Risk Factors” in Kraft’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and Kraft’s Quarterly Report on Form 10-Q for the period ended March 28, 2015, factors contained or incorporated by reference into such documents and in subsequent filings by Kraft with the SEC, and the following factors:

 

    the occurrence of any change, effect, event, occurrence, development, matter, state of facts, series of events or circumstances that could give rise to the termination of the merger agreement, including a termination of the merger agreement under circumstances that could require Kraft to pay a termination fee and/or expenses to Heinz;

 

    uncertainties related to the timing of the receipt of required regulatory approvals for the merger and the possibility that Heinz and Kraft may be required to accept conditions that could reduce the anticipated benefits of the merger as a condition to obtaining such regulatory approvals;

 

    the ability to implement integration plans for the merger and the ability to recognize the anticipated growth and cost savings and benefits of the merger;

 

    the inability to complete the merger due to the failure to obtain Kraft shareholder approval of the merger proposal or the failure to satisfy other conditions to the closing of the merger;

 

    the failure of the merger to close for any other reason;

 

    risks that the merger and the other transactions contemplated by the merger agreement would disrupt current plans and operations and the potential difficulties in retention of any members of senior management of Heinz and Kraft and any other key employees that the combined company is interested in retaining after the closing of the merger;

 

    the outcome of any legal proceedings that have been or may be instituted against Kraft, Heinz and/or others relating to the merger;

 

    diversion of the attention of Kraft’s and Heinz’s respective management from ongoing business concerns;

 

    limitations placed on the ability of Heinz and Kraft to operate their respective businesses by the merger agreement;

 

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    the effect of the announcement of the merger on Kraft’s and Heinz’s business relationships, employees, customers, suppliers, vendors, other partners, standing with regulators, operating results and businesses generally;

 

    the amount of any costs, fees, expenses, impairments and charges related to the merger;

 

    factors that affect customer demand;

 

    customers’ financial strength;

 

    shortages or changes in availability, or increases in costs of, key supplies;

 

    changes in tax laws or interpretations that could increase the consolidated tax liabilities of Heinz and Kraft; and

 

    competitive pressures in all markets in which Heinz and Kraft operate.

Consequently, all of the forward-looking statements Heinz or Kraft make in this document are qualified by the information contained in or incorporated by reference into this proxy statement/prospectus, including, but not limited to, (i) the information contained under this heading, (ii) the information discussed in the section of this proxy statement/prospectus entitled “Risk Factors” and (iii) the information discussed under the sections entitled “Risk Factors” in Kraft’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and Kraft’s Quarterly Report on Form 10-Q for the period ended March 28, 2015. See the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

Neither Heinz nor Kraft is under any obligation, and each expressly disclaim any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this proxy statement/prospectus are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.

 

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RISK FACTORS

By voting in favor of the merger proposal, Kraft shareholders will be choosing to invest in Kraft Heinz common stock following the completion of the merger. An investment in Kraft Heinz common stock involves a high degree of risk. Before you vote, you should carefully consider the risks described below, those described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [] of this proxy statement/prospectus and the other information contained in this proxy statement/prospectus or in the documents of Kraft incorporated by reference into this proxy statement/prospectus, particularly the risk factors discussed in this section of this proxy statement/prospectus entitled “Risk Factors” and in the sections entitled “Risk Factors” in Kraft’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and Kraft’s Quarterly Report on Form 10-Q for the period ended March 28, 2015, each of which is incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus. In addition to the risks set forth below, new risks may emerge from time to time and it is not possible to predict all risk factors, nor can Heinz or Kraft assess the impact of all factors on the merger and the combined company following the merger or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements.

Risks Relating to the Merger

The market price for Kraft Heinz common stock may be affected by factors different from those that historically have affected Kraft common stock.

Following the merger, Kraft shareholders will become shareholders of The Kraft Heinz Company. The combined company’s business will differ from that of Kraft, and accordingly the results of operations of The Kraft Heinz Company following the merger will be affected by some factors that are different from those currently affecting the results of operations of Kraft. This proxy statement/prospectus describes the business of Heinz and incorporates by reference important information regarding the business of Kraft and also describes important factors to consider in connection with those businesses and the business of the combined company. For a discussion of these matters, see, for example, the sections entitled “Business of H. J. Heinz Holding Corporation”, “Management’s Discussion and Analysis of the Financial Condition and Results of Operations of H. J. Heinz Holding Corporation”, “Index to Financial Statements of H. J. Heinz Holding Corporation” and “Unaudited Pro Forma Condensed Combined Financial Statements” in this proxy statement/prospectus as well as the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus.

The shares of Kraft Heinz common stock to be received by Kraft shareholders as a result of the merger will have rights different from the shares of Kraft common stock.

Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. As a result, the rights of Kraft shareholders, who will become shareholders of The Kraft Heinz Company following the merger, will be governed by the new Kraft Heinz charter, by the new Kraft Heinz by-laws and by the DGCL. The rights under the new Kraft Heinz charter, the new Kraft Heinz by-laws and the DGCL will differ in certain material respects from the rights under the Kraft charter, the Kraft by-laws and the VSCA. See “Comparison of Rights of The Kraft Heinz Company Shareholders and Kraft Shareholders” beginning on page [] for a discussion of these rights.

Regulatory approval could prevent, or substantially delay, consummation of the merger.

Under the provisions of the HSR Act, the merger may not be completed until notification and report forms have been filed with the FTC and the DOJ and the expiration of a statutory waiting period, or the early

 

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termination of that waiting period, following the parties’ filing of their respective notification and report forms. On April 6, 2015, 3G Special Situations Fund III, L.P., Berkshire Hathaway and Kraft filed with the FTC and the DOJ their respective notification and report forms under the HSR Act. The waiting period with respect to the notifications filed under the HSR Act expires 30 calendar days after such filings, unless otherwise extended or terminated. On May 6, 2015, 3G Special Situations Fund III, L.P. and Berkshire Hathaway voluntarily withdrew their notification and report forms under the HSR Act and refiled such forms on May 8, 2015, thereby extending the waiting period for an additional 30 calendar days from the date of refiling. The FTC or DOJ may effectively extend the statutory waiting period by requesting additional information regarding the merger and its potential effects on competition. Also, at any time before or after completion of the merger, the FTC or the DOJ could act under the antitrust laws to prevent a substantial lessening of competition or the creation of a monopoly, including by seeking to enjoin completion of the merger or seeking divestiture of assets, businesses or product lines of Heinz or Kraft.

Under the provisions of the Competition Act (Canada), the merger may not be completed until an ARC has been received or the applicable waiting period under the Competition Act has expired, been terminated or waived (for example through the receipt of a no action letter). On April 15, 2015, Heinz and Kraft filed with the Canadian Competition Bureau their respective notifications under the Competition Act with respect to the proposed merger and Heinz filed an application for an ARC or no action letter. The waiting period commenced by the filing of the notifications under the Competition Act will expire 30 calendar days after such filings, unless otherwise extended or terminated or waived. The Competition Bureau may extend the statutory waiting period by requesting additional information regarding the merger and its potential effects on competition through the issuance of a Supplementary Information Request. Also, at any time before or within one year following completion of the merger (unless an ARC has been issued), the Competition Bureau could seek to enjoin the completion of the transaction or seek divestiture of assets, businesses or product lines of Heinz or Kraft in order to prevent a likely substantial prevention or lessening of competition in a relevant market in Canada. On May 15, 2015, prior to the expiry of the waiting period under the Competition Act the Canadian Competition Bureau issued a Supplementary Information Request which has the effect of extending the waiting period for a period that will expire 30 calendar days after a complete response to the Supplementary Information Request is provided to the Canadian Competition Bureau (unless such waiting period is terminated early).

As the Canadian statutory waiting period is extended and as the waiting period under the HSR Act may be extended, it could take an extended period of time to complete the merger. The vote on the merger proposal may occur earlier than the expiration or termination of the Canadian statutory waiting period or the HSR Act waiting period. An extended period of time would increase the chance that an event occurs that constitutes a material adverse effect with respect to Heinz or Kraft and thereby may offer the other party an opportunity not to close the merger. Such extended period of time also may increase the chance that other adverse effects with respect to Heinz or Kraft could occur, such as the loss of key personnel.

Under the merger agreement, Heinz and Kraft generally must take, or cause to be taken, all actions and do, or cause to be done, and assist and cooperate with the other parties in doing, all things necessary to obtain all regulatory approvals required to complete the merger, including the expiration or early termination of the waiting periods under the HSR Act and the Competition Act. However, Heinz and Kraft are not required under the merger agreement to accept or agree to limitations on its right to control or operate its business or assets (including the business or assets of Heinz or Kraft and its subsidiaries after the completion of the merger) or to agree to sell or otherwise dispose of, hold (through the establishment of a trust or otherwise) or divest itself of all or any portion of its business, assets or operations (including the business, assets or operations of Kraft and its subsidiaries after the completion of the merger) in order to obtain such regulatory approvals if doing so would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition of Heinz, Kraft and their respective subsidiaries, taken as a whole. Heinz and Kraft can provide no assurance that all required regulatory authorizations, approvals or consents will be obtained, on a timely basis or at all, or that the authorizations, approvals or consents will not contain terms, conditions or restrictions that would be detrimental to the combined company after completion of the merger.

 

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The special meeting of Kraft shareholders at which the merger agreement will be considered may take place before all of the required regulatory approvals have been obtained and before all conditions to such approvals, if any, are known. In this event, if the merger proposal is approved, Heinz and Kraft may subsequently agree to conditions without further seeking shareholder approval, even if such conditions could have an adverse effect on Kraft, Heinz or the combined company, except as required by applicable law.

The closing of the merger is subject to many conditions and if these conditions are not satisfied or waived, the merger will not be completed.

The closing of the merger is subject to a number of conditions as set forth in the merger agreement that must be satisfied or waived, including the Kraft shareholder approval of the merger proposal, the expiration or termination of the waiting period applicable to the merger under antitrust laws, the absence of any law or order prohibiting the closing of the merger, the declaration by the SEC of the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part filed by Heinz in respect of the shares of Kraft Heinz common stock to be issued in the merger, of which this proxy statement/prospectus forms a part, and the authorization of the listing on the NYSE or the NASDAQ of the shares of Kraft Heinz common stock to be issued in the merger.

The closing of the merger is also dependent on the accuracy of representations and warranties made by the parties to the merger agreement (subject to customary materiality qualifiers and other customary exceptions) and the performance in all material respects by the parties of obligations imposed under the merger agreement.

For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement/prospectus.

There can be no assurance as to whether or when the conditions to the closing of the merger will be satisfied or waived or as to whether or when the merger will be consummated.

The opinion of Kraft’s financial advisor will not reflect changes in circumstances between the signing of the merger agreement and the completion of the merger.

Kraft has not obtained an updated opinion in respect of the consideration to be paid to Kraft shareholders in connection with the merger from its financial advisor, Centerview, as of the date of this proxy statement/prospectus and does not expect to receive an updated opinion prior to the completion of the merger. Changes in the operations and prospects of Kraft, general market and economic conditions and other factors that may be beyond the control of Kraft, and on which the opinion of Centerview was based, may significantly alter the value of Kraft or the price of Kraft common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of the opinion. Because Centerview will not be updating its opinion, which was issued in connection with the execution of the merger agreement on March 24, 2015, the opinion will not address the fairness of the merger consideration from a financial point of view at the time the merger is completed. The recommendation of the Kraft board that Kraft shareholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal, however, are made as of the date of this proxy statement/prospectus. For a description of the opinion that Kraft received from Centerview, see the section entitled “The Merger—Opinion of Kraft’s Financial Advisor” beginning on page [] of this proxy statement/prospectus.

Heinz and Kraft will be subject to business uncertainties and certain operating restrictions until consummation of the merger.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on Heinz, Kraft or the combined company following the merger. These uncertainties could disrupt the business of

 

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Heinz or Kraft and cause customers, suppliers, vendors, partners and others that deal with Heinz and Kraft to defer entering into contracts with Heinz and Kraft or making other decisions concerning Heinz and Kraft or seek to change or cancel existing business relationships with Heinz and Kraft. Retention and motivation of certain employees may be challenging during the pendency of the merger due to uncertainty about their future roles and difficulty of integration. If key employees depart because of issues related to the uncertainty and difficulty of integration or a desire not to remain with the combined company, The Kraft Heinz Company’s business following the merger could be negatively impacted. In addition, the merger agreement restricts the parties thereto from making certain acquisitions and investments and taking other specified actions until the merger occurs without the consent of the other party. These restrictions may prevent Heinz and Kraft from pursuing attractive business opportunities that may arise prior to the completion of the merger. See the section entitled “The Merger Agreement—Conduct of Business” beginning on page [] of this proxy statement/prospectus for a description of the restrictive covenants to which each of Heinz and Kraft is subject.

The merger agreement contains restrictions on the ability of Kraft to pursue other alternatives to the merger.

The merger agreement contains non-solicitation provisions that, subject to limited exceptions, restrict the ability of Kraft to solicit, initiate or knowingly facilitate any inquiries regarding any third-party offer or proposal that might reasonably be expected to lead to a takeover proposal. Further, subject to limited exceptions, consistent with applicable law, the merger agreement provides that the Kraft board will not withhold, withdraw or modify in a manner adverse to Heinz its recommendation that Kraft shareholders vote in favor of the merger proposal, and in specified circumstances, if Heinz requests, Heinz has a right to negotiate with Kraft in order to match any competing takeover proposals that may be made. Although the Kraft board is permitted to take certain actions in response to a superior proposal or a takeover proposal that is reasonably likely to result in a superior proposal if it determines that the failure to do so would be reasonably likely to be inconsistent with its fiduciary duties, doing so in specified situations could require Kraft to pay to Heinz a termination fee of $1.2 billion. See the sections entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus and “The Merger Agreement—Expenses and Termination Fees; Liability for Breach” beginning on page [] of this proxy statement/prospectus for a more complete discussion of these restrictions and consequences.

Such provisions could discourage a potential acquiror that might have an interest in making a proposal from considering or proposing any such transaction, even if it were prepared to pay consideration with a higher value to Kraft shareholders than that to be paid in the merger. There also is a risk that the requirement to pay the termination fee or expense payment to Heinz in certain circumstances may result in a potential acquiror proposing to pay a lower per share price to acquire Kraft than it might otherwise have proposed to pay.

The merger agreement may be terminated in accordance with its terms and the merger may not be completed.

The merger agreement is subject to a number of conditions that must be fulfilled to complete the merger, including approval of the merger proposal by Kraft’s shareholders, receipt of requisite regulatory approvals, absence of orders prohibiting completion of the merger, effectiveness of the registration statement of which this document is a part, authorization for listing on NASDAQ or NYSE of the shares of Kraft Heinz common stock to be issued to Kraft shareholders in the merger, the continued accuracy of the representations and warranties by both parties, the performance by both parties of their covenants and agreements, and the receipt by Heinz and Kraft of legal opinions from their respective tax counsels. These conditions to the closing of the merger may not be fulfilled and, accordingly, the mergers may not be completed. In addition, either Heinz or Kraft may terminate the merger agreement under certain circumstances including, among other reasons, if the merger is not completed by March 31, 2016. For a discussion of the circumstances under which the merger agreement could be terminated and when a termination fee and expense payment may be payable by Kraft, see the sections entitled “The Merger Agreement—No Solicitation of Takeover Proposals” beginning on page [] of this proxy statement/prospectus and “The Merger Agreement—Expenses and Termination Fees; Liability for Breach” beginning on page [] of this proxy statement/prospectus.

 

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The termination of the merger agreement could negatively impact Kraft.

If the merger is not completed for any reason, including as a result of Kraft shareholders failing to approve the merger proposal, the ongoing businesses of Kraft may be adversely affected and, without realizing any of the anticipated benefits of having completed the merger, Kraft would be subject to a number of risks, including the following:

 

    Kraft may experience negative reactions from the financial markets, including a decline of its stock price (which may reflect a market assumption that the merger will be completed);

 

    Kraft may experience negative reactions from their respective customers, regulators and employees;

 

    Kraft will be required to pay certain costs relating to the merger, whether or not the merger is completed; and

 

    matters relating to the merger (including integration planning) will require substantial commitments of time and resources by Kraft management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Kraft as an independent company.

If the merger agreement is terminated and the Kraft board seeks another merger, business combination or other transaction, Kraft shareholders cannot be certain that Kraft will be able to find a party willing to offer equivalent or more attractive consideration than the consideration Kraft shareholders would receive in the merger (including the $16.50 per share special cash dividend to be paid to record holders of Kraft common stock immediately prior to closing). If the merger agreement is terminated under certain circumstances specified in the merger agreement, Kraft may be required to pay Heinz a termination fee of $1.2 billion, depending on the circumstances surrounding the termination. In addition, Kraft may be required to reimburse Heinz for its reasonable and documented out-of-pocket transaction fees and expenses, up to an amount of $15 million. See the sections entitled “The Merger Agreement—Expenses and Termination Fees; Liability for Breach” beginning on page [] of this proxy statement/prospectus for a more complete discussion of the circumstances under which the merger agreement could be terminated and when the termination fee and expense payment may be payable by Kraft.

Directors and executive officers of Kraft have interests in the merger that are different from, and in addition to, those of Kraft shareholders generally.

The directors and executive officers of Kraft have interests in the merger that are different from, and in addition to, those of Kraft shareholders generally. These interests include the continued employment of certain executive officers of Kraft, the treatment in the merger of Kraft stock options and other stock-based awards, annual bonus opportunities, a change in control plan and other rights held by Kraft’s directors and executive officers, and the indemnification of former Kraft directors and officers by Heinz. Kraft shareholders should be aware of these interests when they consider the recommendation of the Kraft board that they vote in favor of the merger proposal. The Kraft board was aware of and considered these interests when it determined that the terms of the merger agreement and the transactions contemplated thereby were fair to, and in the best interests of, Kraft and its shareholders, and recommended that Kraft shareholders approve the merger proposal and the transactions contemplated by the merger agreement.

Under the terms of the Kraft Stock Plan, vesting of unvested stock-based awards held by employees, including Kraft’s executive officers, would accelerate upon a qualifying termination on or within two years following the merger. As of April 1, 2015, which is the assumed date of the closing of the merger solely for the purposes of this risk factor, Kraft’s executive officers as a group held unvested stock-based awards with the following estimated values (based on a price per Kraft common share of $86.88, which is the average closing market price per Kraft common share as quoted on the NASDAQ over the five business days following the first public announcement of the merger, commencing on March 25, 2015): restricted stock units—$13,221,225, stock options—$17,172,693 and performance-based restricted shares—$20,831,131. The aggregate pro rata amount in respect of 2015 annual bonuses that would be payable to Kraft’s executive officers as a group as of the assumed

 

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closing date of the merger on April 1, 2015 based on target performance is $1,611,533, and Kraft’s executive officers as a group would receive approximately $23,381,237 upon a qualifying termination under the CIC Plan on such date. See the section entitled “Advisory Vote on Merger-Related Compensation for Kraft’s Named Executive Officers” beginning on page [] of this proxy statement/prospectus for other assumptions used to calculate these estimates and see the section entitled “Financial Interests of Kraft Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement/prospectus for additional details regarding these interests.

The unaudited pro forma condensed combined financial statements included in this proxy statement/prospectus are presented for illustrative purposes only and the actual financial condition and results of operations of the combined company following the merger may differ materially.

The unaudited pro forma condensed combined financial statements contained in this proxy statement/prospectus are presented for illustrative purposes only, are based on various adjustments, assumptions and preliminary estimates, and may not be an indication of financial condition or results of operations of the combined company following the merger for several reasons. The actual financial condition and results of operations of the combined company following the merger may not be consistent with, or evident from, these unaudited pro forma condensed combined financial statements. In addition, the assumptions used in preparing the unaudited pro forma condensed combined financial statements may not prove to be accurate, and other factors may affect the combined company’s financial condition or results of operations following the merger. Any potential decline in the combined company’s financial condition or results of operations may cause significant variations in the stock price of The Kraft Heinz Company following the closing of the merger.

Kraft shareholders will have less influence, as a group, as shareholders of The Kraft Heinz Company following the closing of the merger than as shareholders of Kraft.

Following the merger, former Kraft shareholders, who currently collectively own 100% of Kraft, will own, on a fully diluted basis, approximately 49% of outstanding Kraft Heinz common stock. Consequently, Kraft shareholders, as a group, will exercise less influence over the management and policies of the combined company than they currently may have over the management and policies of Kraft.

Risks Relating to the Combined Company Following the Merger

The Kraft Heinz Company may fail to realize the anticipated benefits of the merger.

The success of the merger will depend on, among other things, Heinz’s ability to combine its business with that of Kraft in a manner that facilitates growth opportunities and realizes anticipated growth and cost savings. Heinz believes that the merger will provide an opportunity for revenue growth in food and beverage products and other areas, including a number of new business areas for Heinz.

However, Heinz must successfully combine the businesses of Heinz and Kraft in a manner that permits these anticipated benefits to be realized. In addition, the combined company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated benefits of the merger may not be realized fully, or at all, or may take longer to realize than expected.

The failure to integrate successfully the business and operations of Kraft in the expected time frame may adversely affect the combined company’s future results.

Historically, Heinz and Kraft have operated as independent companies, and they will continue to do so until the completion of the merger. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Heinz or Kraft employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses or in unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that

 

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takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of Heinz and Kraft in order to realize the anticipated benefits of the merger:

 

    combining the companies’ operations and corporate functions;

 

    combining the businesses of Heinz and Kraft and meeting the capital requirements of the combined company in a manner that permits Heinz and Kraft to achieve the cost savings or revenue synergies anticipated to result from the merger, the failure of which would result in the anticipated benefits of the merger not being realized in the time frame currently anticipated or at all;

 

    integrating the companies’ technologies;

 

    integrating and unifying the offerings and services available to customers;

 

    identifying and eliminating redundant and underperforming functions and assets;

 

    harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

    maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers and vendors;

 

    addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

    consolidating the companies’ administrative and information technology infrastructure;

 

    coordinating distribution and marketing efforts;

 

    managing the movement of certain positions to different locations;

 

    coordinating geographically dispersed organizations; and

 

    effecting actions that may be required in connection with obtaining regulatory approvals.

In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the merger and the integration of the businesses of the two companies and diverted from day-to-day business operations, which may disrupt each company’s ongoing business and the business of the combined company following the merger.

Combining the businesses of Heinz and Kraft may be more difficult, costly or time-consuming than expected, which may adversely affect the combined company’s results and negatively affect the value of its common stock following the merger.

Heinz and Kraft have entered into the merger agreement because each believes that the merger will be beneficial to its respective companies and shareholders and that combining the businesses of Heinz and Kraft will produce benefits and cost savings. If the combined company is not able to successfully combine the businesses of Heinz and Kraft in an efficient and effective manner, the anticipated benefits and cost savings of the merger may not be realized fully, or at all, or may take longer to realize than expected, and the value of Kraft Heinz common stock may be affected adversely.

An inability to realize the full extent of the anticipated benefits of the merger and the other transactions contemplated by the merger agreement, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of Kraft Heinz common stock after following the merger.

In addition, the actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and cost savings, if achieved, may be lower

 

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than what the combined company expects and may take longer to achieve than anticipated. If The Kraft Heinz Company is not able to adequately address integration challenges, the combined company may be unable to successfully integrate Heinz’s and Kraft’s operations or to realize the anticipated benefits of the integration of the two companies.

Heinz and Kraft will incur significant transaction and merger-related costs in connection with the merger.

Heinz and Kraft have incurred and expect to incur a number of non-recurring costs associated with the merger. These costs and expenses include fees paid to financial, legal and accounting advisors, facilities and systems consolidation costs, severance and other potential employment-related costs, including payments that may be made to certain Kraft executive officers, filing fees, printing expenses and other related charges. Some of these costs are payable by Heinz and Kraft regardless of whether or not the merger is completed. There is also a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the merger and the integration of the two companies’ businesses. While both Heinz and Kraft have assumed that a certain level of expenses would be incurred in connection with the merger and the other transactions contemplated by the merger agreement, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses.

There may also be additional unanticipated significant costs and charges in connection with the merger that the combined company may not recoup. These costs and expenses could reduce the realization of efficiencies, strategic benefits and additional income Heinz and Kraft expect to achieve from the merger. Although Heinz and Kraft expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at all.

Third parties may terminate or alter existing contracts or relationships with Heinz or Kraft.

Heinz and Kraft have contracts with customers, suppliers, vendors, landlords, licensors and other business partners which may require Heinz or Kraft to obtain consents from these other parties in connection with the merger. If these consents cannot be obtained, Heinz or Kraft may suffer a loss of potential future revenues and may lose rights that are material to its respective businesses and the business of the combined company. In addition, third parties with whom Heinz or Kraft currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the merger. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the merger. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the merger or the termination of the merger agreement.

The combined company’s revenues and earnings may be exposed to exchange rate fluctuations.

Heinz and Kraft derive a substantial portion of their respective net revenues from international operations. For the years ended December 27, 2014 and December 28, 2013, Kraft derived approximately 13% and 14%, respectively, of its consolidated net revenues from operations outside the United States, and for the year ended December 28, 2014, the Successor period from February 8, 2013 to December 29, 2013 and the Predecessor period from April 29, 2013 to June 7, 2013, Heinz derived approximately 67% of its net revenues from operations outside the United States. Since the consolidated financial statements of each of Heinz and Kraft are denominated in U.S. dollars, fluctuations in exchange rates from period to period will have an impact on the reported results of each of Heinz and Kraft, and, following the merger, may have an impact on the combined company’s reported results. Heinz and Kraft have implemented currency hedges intended to reduce their respective exposures to changes in foreign currency exchange rates. However, these hedging strategies may not be successful and any of Heinz or Kraft’s unhedged foreign exchange exposures will continue to be subject to market fluctuations. In addition, in certain circumstances, Heinz or Kraft may incur costs in one currency related to its services or products for which it is paid in a different currency. As a result, factors associated with international operations, including changes in foreign currency exchange rates, could significantly affect the combined company’s results of operations, financial condition and cash flows following the completion of the merger.

 

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The combined company may not be able to successfully execute its international expansion strategies.

Heinz and Kraft plan to drive additional growth and profitability through international distribution channels. Consumer demand, behavior, taste and purchasing trends may differ in international markets and, as a result, sales of the combined company’s products may not be successful or meet expectations, or the margins on those sales may be less than currently anticipated. The combined company may also face difficulties integrating foreign business operations with its current sourcing, distribution, information technology systems and other operations. Any of these challenges could hinder the combined company’s success in new markets or new distribution channels. There can be no assurance that the combined company will successfully complete any planned international expansion or that any new business will be profitable or meet the combined company’s expectations.

The combined company may be unable to retain Kraft and/or Heinz personnel successfully after the merger is completed.

The success of the merger will depend in part on the combined company’s ability to retain the talents and dedication of key employees currently employed by Heinz and Kraft. It is possible that these employees may decide not to remain with Heinz or Kraft, as applicable, while the merger is pending or with the combined company after the merger is consummated. If key employees terminate their employment, or if an insufficient number of employees is retained to maintain effective operations, the combined company’s business activities may be adversely affected and management’s attention may be diverted from successfully integrating Kraft to hiring suitable replacements, all of which may cause the combined company’s business to suffer. In addition, Heinz and Kraft may not be able to locate suitable replacements for any key employees who leave either company, or offer employment to potential replacements on reasonable terms.

The combined company’s level of indebtedness could adversely affect its ability to raise additional capital to fund its operations and make strategic acquisitions, limit its ability to react to changes in the economy or its industry and prevent it from meeting its obligations under its existing indebtedness.

The Kraft Heinz Company will have a substantial amount of indebtedness following the consummation of the merger. See the section entitled “The Merger—Debt Matters” beginning on page [] of this proxy statement/prospectus. In addition, the terms of Heinz and Kraft indebtedness that Heinz and Kraft expect will remain outstanding following the consummation of the merger will permit The Kraft Heinz Company to incur a substantial amount of additional indebtedness, including secured debt. The existing debt together with the incurrence of additional indebtedness could have important consequences for creditors of The Kraft Heinz Company. For example, it could:

 

    limit the combined company’s ability to obtain additional financing for working capital, capital expenditures, research and development, debt service requirements, acquisitions and general corporate or other purposes;

 

    result in a downgrade to the combined company’s credit rating;

 

    restrict the combined company from making strategic acquisitions or cause the combined company to make non-strategic divestitures;

 

    limit the combined company’s ability to adjust to changing market conditions and place the combined company at a competitive disadvantage compared to its competitors who are not as highly leveraged;

 

    increase the combined company’s vulnerability to general economic and industry conditions;

 

    make it more difficult for the combined company to make payments on its existing indebtedness;

 

    require a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on the combined company’s indebtedness, thereby reducing its ability to use the combined company’s cash flow to fund its operations, capital expenditures and future business opportunities; and

 

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    in the case of any additional indebtedness, exacerbate the risks associated with the substantial financial leverage of The Kraft Heinz Company.

In addition, the credit agreements and indentures governing the indebtedness that will remain in place following the consummation of the merger contain various covenants that will limit the ability of The Kraft Heinz Company to engage in specified types of transactions. These covenants will limit The Kraft Heinz Company’s and its restricted subsidiaries’ ability to, among other things, incur or guarantee additional indebtedness, pay dividends on, or redeem or repurchase, the combined company capital stock, make certain acquisitions or investments, materially change its business, incur or permit to exist certain liens, enter into transactions with affiliates or sell its assets to, or merge or consolidate with or into, another company, in each case with customary exceptions.

To service its indebtedness, the combined company will require a significant amount of cash and its ability to generate cash depends on many factors beyond its control.

The combined company’s ability to make cash payments on and to refinance the combined company indebtedness and to fund planned capital expenditures will depend on the combined company’s ability to generate significant operating cash flow in the future, as will the combined company’s ability to make dividend payments to fund the 9.0% per annum Series A Preferred Stock dividend to Berkshire Hathaway described in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of H.J. Heinz Holding Corporation—Liquidity and Financial Position” beginning on page [] of this proxy statement/prospectus. This ability is, to a significant extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that will be beyond the combined company’s control.

The combined company’s business may not generate sufficient cash flow from operations to enable the combined company to pay its indebtedness, to pay the Series A Preferred Stock dividend or to fund its other liquidity needs. In any such circumstance, the combined company may need to refinance all or a portion of its indebtedness, on or before maturity. The combined company may not be able to refinance any indebtedness on commercially reasonable terms or at all. If the combined company cannot service its indebtedness, it may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions and investments. Any such action, if necessary, may not be effected on commercially reasonable terms or at all. The instruments governing the combined company’s indebtedness may restrict the combined company’s ability to sell assets and the combined company’s use of the proceeds from such sales.

If the combined company is unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on its indebtedness, or if it otherwise fail to comply with the various covenants in the instruments governing its indebtedness, it could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under Heinz credit agreement, or any replacement revolving credit facility in respect thereof, could elect to terminate their revolving commitments thereunder, cease making further loans and institute foreclosure proceedings against the combined company’s assets, and the combined company could be forced into bankruptcy or liquidation.

If a credit rating downgrade were to occur, The Kraft Heinz Company may be required to purchase legacy Kraft notes and may be unable to do so.

Kraft has a substantial amount of debt outstanding, comprised of various series of outstanding notes. See the section entitled “The Merger—Debt Matters” beginning on page [] of this proxy statement/prospectus. These notes generally require Kraft (or any successor to Kraft) to offer to repurchase all outstanding notes of each series at 101% of the principal amount thereof plus, without duplication, accrued and unpaid interest, if any, to the date of repurchase should Kraft undergo a change of control and receive a credit rating downgrade below investment

 

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grade. Because the merger will constitute a change of control of Kraft, if any such series is rated below investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Financial Services LLC within the first 60 days following the effectiveness of the merger, H. J. Heinz Company will be required to offer to repurchase all outstanding notes of each such series at 101% of the principal amount thereof plus, without duplication, accrued and unpaid interest, if any, to the date of repurchase. The combined company may not have sufficient funds (including as a result of a failure to raise sufficient funds through the debt or equity markets) to finance a required repurchase of such notes by H. J. Heinz Company. The failure to finance or complete such an offer would place H. J. Heinz Company in default under the indenture governing the notes. Additionally, if there is increased volatility or a disruption in the global capital and credit markets, it could impair Heinz’s ability to access these markets for purposes of funding a required repurchase on commercially acceptable terms.

Risks Relating to Ownership of Kraft Heinz Common Stock

Because there is currently no public market for Heinz common stock, the market price and trading volume of Kraft Heinz common stock may be volatile, and holders of common stock may not be able to sell shares of Kraft Heinz common stock following the merger.

Prior to the completion of the merger, Heinz common stock will not be publicly traded and there will not have been any public market for Heinz common stock. Following the completion of the merger, an active trading market for the Kraft Heinz common stock may not develop or be sustained. As a result, no public market price is available to Kraft shareholders for use in determining the value of Kraft Heinz common stock they are entitled to receive as merger consideration. We cannot predict the extent to which investor interest will lead to the development of an active trading market in shares of Kraft Heinz common stock or whether such a market will be sustained following the merger.

The market price of Kraft Heinz common stock after the completion of the merger will be subject to significant fluctuations in response to, among other factors, variations in operating results and market conditions specific to the combined company’s industry. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares at a price that is attractive to you, or at all. The market price of Kraft Heinz common stock could fluctuate significantly for many reasons, including, without limitation:

 

    as a result of the risk factors listed in this proxy statement/prospectus;

 

    actual or anticipated fluctuations in the combined company’s operating results;

 

    for reasons unrelated to operating performance, such as reports by industry analysts, investor perceptions, or negative announcements by the combined company’s customers or competitors regarding their own performance;

 

    regulatory changes that could impact the combined company’s business; and

 

    general economic and industry conditions.

Following the merger, the Sponsors will have substantial control over the combined company and may have conflicts of interest with the combined company in the future.

Following the merger, the Sponsors (together with current Heinz management) will own approximately 51% of Kraft Heinz common stock on a fully diluted basis. The Sponsors will also appoint six of the initial 11 directors of The Kraft Heinz Company at the closing of the merger pursuant to the merger agreement and Bernardo Hees, the Chief Executive Officer of Heinz and a partner of 3G Capital, one of the Sponsors, will continue to serve as the Chief Executive Officer of the combined company. As a result, the Sponsors will have substantial control over the management of the combined company and decisions of the board of directors as well as over any action requiring the approval of the holders of Kraft Heinz common stock, including adopting any amendments to the new Kraft Heinz charter, electing directors and approving mergers or sales of substantially all of the combined company’s capital stock or its assets. In addition, to the extent that the Sponsors collectively hold a majority of Kraft Heinz common stock, they together would have the power to take

 

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shareholder action by written consent to adopt amendments to the new Kraft Heinz charter or take other actions that require the vote of holders of a majority of the outstanding common stock. See the section entitled “Description of Kraft Heinz Common Stock”, beginning on page [] of this proxy statement/prospectus. The directors designated by the Sponsors will have significant authority to effect decisions affecting the capital structure of the combined company, including the issuance of additional capital stock, incurrence of additional indebtedness, the implementation of stock repurchase programs and the decision of whether or not to declare dividends. Additionally, the Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with the combined company. The Sponsors may also pursue acquisition opportunities that may be complementary to the combined company’s business, and, as a result, those acquisition opportunities may not be available to the combined company. So long as the Sponsors continue to own a significant amount of the equity of the combined company, they will continue to be able to strongly influence or effectively control the combined company’s decisions.

Future sales of Kraft Heinz common stock in the public market could cause volatility in the price of Kraft Heinz common stock or cause the share price to fall.

Sales of a substantial number of shares of Kraft Heinz common stock in the public market, or the perception that these sales might occur, could depress the market price of Kraft Heinz common stock, and could impair The Kraft Heinz Company’s ability to raise capital through the sale of additional equity securities.

The merger agreement provides that The Kraft Heinz Company, 3G Global Food Holdings and Berkshire Hathaway will enter into a registration rights agreement requiring The Kraft Heinz Company to register for resale under the Securities Act all registrable shares held by 3G Global Food Holdings and Berkshire Hathaway, which represents all shares of common stock in The Kraft Heinz Company held by the Sponsors as of the date of the closing of the merger. As of the closing date, registrable shares will represent approximately 51% of the outstanding stock of The Kraft Heinz Company on a fully diluted basis. Although the registrable shares are subject to certain holdback and suspension periods, the registrable shares will not be subject to a “lock-up” or similar restriction under the registration rights agreement as of the closing of the merger and we do not anticipate a blackout affecting the registrable shares will be in effect. Accordingly, sales of a large number of registrable shares may be made after the closing of the merger upon registration of such shares with the SEC in accordance with the terms of the registration rights agreement. Registration and sales of Kraft Heinz common stock effected pursuant to the registration rights agreement will increase the number of shares being sold in the public market and may increase the volatility of the price of Kraft Heinz common stock. See “Other Related Agreements—Registration Rights Agreement” beginning on page [] of this proxy statement/prospectus.

The Kraft Heinz Company’s ability to pay regular dividends to its shareholders is subject to the discretion of the board of directors and may be limited by The Kraft Heinz Company’s debt agreements, limitations under Delaware law and the rights of holders of Series A Preferred Stock.

Although it is currently anticipated that The Kraft Heinz Company will pay a regular quarterly dividend following the closing of the merger, any such determination to pay dividends will be at the discretion of the board of directors and will be dependent on then-existing conditions, including the combined company’s financial condition, earnings, legal requirements, including limitations under Delaware law, restrictions in Heinz’s debt agreements that limit its ability to pay dividends to shareholders, the rights of holders of shares of the Series A Preferred Stock to receive dividends in respect of such shares prior to The Kraft Heinz Company being permitted to pay any dividends in respect of the Kraft Heinz common stock and other factors the board of directors deems relevant. The board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. For these reasons, you will not be able to rely on dividends to receive a return on your investment. Accordingly, realization of a gain on your shares of Kraft Heinz common stock received in the merger may depend on the appreciation of the price of Kraft Heinz common stock, which may never occur.

 

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The Kraft Heinz Company may not generate U.S. earnings and profits sufficient for distributions paid to shareholders to be treated as dividends for U.S. federal income tax purposes.

Although it is currently anticipated that The Kraft Heinz Company will pay regular quarterly dividends following the closing of the merger, the earnings and profits of The Kraft Heinz Company (as determined under U.S. tax principles) may not be sufficient for all or a portion of these distributions to be treated as dividends for U.S. federal income tax purposes. If The Kraft Heinz Company’s earnings and profits are not sufficient, these distributions would be treated as a return of capital to each shareholder, up to the extent of the shareholder’s tax basis. If a shareholder does not have sufficient tax basis, these distributions could result in taxable gains to the shareholder. Shareholders should consult their tax advisors for a full understanding of all of the tax consequences of the receipt of dividends, including distributions in excess of the earnings and profits of The Kraft Heinz Company.

Risks Relating to Heinz’s Business

You should read and consider the following risk factors specific to Heinz’s business, which will also affect the combined company after the merger.

Competitive product and pricing pressures in the food industry and the financial condition of customers and suppliers could adversely affect Heinz’s ability to gain or maintain market share and/or profitability.

Heinz operates in the highly competitive food industry, competing with other companies that have varying abilities to withstand changing market conditions. Any significant change in Heinz’s relationship with a major customer, including changes in product prices, sales volume, or contractual terms, may impact financial results. Such changes may result because Heinz’s competitors may have substantial financial, marketing, and other resources that may change the competitive environment. Private label brands sold by retail customers, which are typically sold at lower prices, are a source of competition for certain of Heinz’s product lines. Such competition could cause Heinz to reduce prices and/or increase capital, marketing, and other expenditures, or could result in the loss of category share. Such changes could have a material adverse impact on Heinz’s net income. As the retail grocery trade continues to consolidate, the larger retail customers of Heinz could seek to use their positions to improve their profitability through lower pricing and increased promotional programs. If Heinz is unable to use its scale, marketing expertise, product innovation, and category leadership positions to respond to these changes, or is unable to increase its prices, its profitability and volume growth could be impacted in a materially adverse way. The success of Heinz’s business depends, in part, upon the financial strength and viability of Heinz’s suppliers and customers. The financial condition of those suppliers and customers is affected in large part by conditions and events that are beyond Heinz’s control. A significant deterioration of their financial condition could adversely affect Heinz’s financial results.

Heinz’s performance may be adversely affected by economic and political conditions in the U.S. and in various other nations where it does business.

Heinz’s performance has been in the past and may continue in the future to be impacted by economic and political conditions in the United States and in other nations. Such conditions and factors include changes in applicable laws and regulations, including changes in food and drug laws, accounting standards and critical accounting estimates, taxation requirements and environmental laws. Other factors impacting Heinz’s operations in the U.S., Venezuela, Russia and other international locations where Heinz does business include export and import restrictions, currency exchange rates, currency devaluation, recessionary conditions, foreign ownership restrictions, nationalization, the impact of hyperinflationary environments, terrorist acts, and political unrest. Such factors in either domestic or foreign jurisdictions could materially and adversely affect Heinz’s financial results. For further information on Venezuela, see the section entitled “Venezuela—Foreign Currency and Inflation” in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of H.J. Heinz Holding Corporation” beginning at page [] of this proxy statement/prospectus.

 

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Increases in the cost and restrictions on the availability of raw materials could adversely affect Heinz’s financial results.

Heinz sources raw materials including agricultural commodities such as tomatoes, cucumbers, potatoes, onions, other fruits and vegetables, dairy products, meat, sugar and other sweeteners, including high fructose corn syrup, spices, and flour, as well as packaging materials such as glass, plastic, metal, paper, fiberboard, and other materials and inputs such as water, in order to manufacture products. The availability or cost of such commodities may fluctuate widely due to government policy and regulation, crop failures or shortages due to plant disease or insect and other pest infestation, weather conditions, potential impact of climate change, increased demand for biofuels, or other unforeseen circumstances. Additionally, the cost of raw materials and finished products may fluctuate due to movements in cross-currency transaction rates. To the extent that any of the foregoing or other unknown factors increase the prices of such commodities or materials and Heinz is unable to increase its prices or adequately hedge against such changes in a manner that offsets such changes, the results of its operations could be materially and adversely affected. Similarly, if supplier arrangements and relationships result in increased and unforeseen expenses, Heinz’s financial results could be materially and adversely impacted.

Heinz’s results of operations could be affected by natural events in the locations in which it or its customers, suppliers or regulators operate.

Heinz may be impacted by severe weather and other geological events, including hurricanes, earthquakes, floods or tsunamis that could disrupt Heinz’s operations or the operations of its customers, suppliers and regulators. Natural disasters or other disruptions at any of Heinz’s facilities or its suppliers’ facilities may impair or delay the delivery of Heinz products. Influenza or other pandemics could disrupt production of Heinz’s products, reduce demand for certain of Heinz’s products, or disrupt the marketplace in the foodservice or retail environment with consequent material adverse effects on Heinz’s results of operations. While Heinz insures against certain business interruption risks, Heinz cannot provide any assurance that such insurance will compensate it for any losses incurred as a result of natural or other disasters. To the extent Heinz is unable to, or cannot, financially mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from a single location, there could be a material adverse effect on Heinz’s business and results of operations, and additional resources could be required to restore its supply chain.

Higher energy costs and other factors affecting the cost of producing, transporting, and distributing Heinz’s products could adversely affect Heinz’s financial results.

Rising fuel and energy costs may have a significant impact on the cost of operations, including the manufacture, transportation, and distribution of products. Fuel costs may fluctuate due to a number of factors outside the control of Heinz, including government policy and regulation and weather conditions. Additionally, Heinz may be unable to maintain favorable arrangements with respect to the costs of procuring raw materials, packaging, services, and transporting products, which could result in increased expenses and negatively affect operations. If Heinz is unable to hedge against such increases or raise the prices of its products to offset the changes, its results of operations could be materially and adversely affected.

The results of Heinz could be adversely impacted as a result of increased pension, labor, and people-related expenses.

Inflationary pressures and any shortages in the labor market could increase labor costs, which could have a material adverse effect on Heinz’s consolidated operating results or financial condition. Heinz’s labor costs include the cost of providing employee benefits in the U.S. and foreign jurisdictions, including pension, health and welfare, and severance benefits. Any declines in market returns could adversely impact the funding of pension plans, the assets of which are invested in a diversified portfolio of equity and fixed income securities and

 

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other investments. Additionally, the annual costs of benefits vary with increased costs of health care and the outcome of collectively-bargained wage and benefit agreements.

The impact of various food safety, environmental, legal, tax, and other regulations and related developments could adversely affect Heinz’s sales and profitability.

Heinz is subject to numerous food safety and other laws and regulations regarding the manufacturing, marketing, and distribution of food products. These regulations govern matters such as ingredients, advertising, taxation, relations with distributors and retailers, health and safety matters, and environmental concerns. Any failure to effectively plan for regulatory changes or effects, and the need to comply with new or revised laws or regulations with regard to licensing requirements, trade and pricing practices, environmental permitting, or other food or safety matters, or new interpretations or enforcement of existing laws and regulations, as well as any related litigation, may have a material adverse effect on Heinz’s sales and profitability.

Product recalls could have an adverse impact on Heinz’s business.

If any of Heinz’s products become misbranded or adulterated, Heinz may need to conduct a product recall. A recall could result in significant costs incurred as a result of the recall, potential destruction of inventory, and lost sales. A recall is also likely to provoke litigation and Heinz may be liable for monetary damages as a result of a judgment against it. A significant product recall or product liability case could cause a loss of consumer confidence in Heinz’s food products and could have a material adverse effect on the value of its brands and results of operations.

The failure of new product or packaging introductions to gain trade and consumer acceptance and changes in consumer preferences could adversely affect Heinz’s sales.

The success of Heinz is dependent upon anticipating and reacting to changes in consumer preferences, including with respect to health and wellness. There are inherent risks associated with new product or packaging introductions, including uncertainties about trade and consumer acceptance. Moreover, success is dependent upon Heinz’s ability to identify and respond to consumer trends through innovation. Heinz may be required to increase expenditures for new product development. Heinz may not be successful in developing new products or improving existing products, or its new products may not achieve consumer acceptance, each of which could materially and negatively impact sales.

The failure to successfully integrate acquisitions and joint ventures into Heinz’s existing operations or the failure to gain applicable regulatory approval for such transactions or divestitures could adversely affect Heinz’s financial results.

Heinz may seek to expand its business through acquisitions and joint ventures, and may divest underperforming or non-core businesses. Heinz’s success depends, in part, upon its ability to identify such acquisition, joint venture, and divestiture opportunities and to negotiate favorable contractual terms. Activities in such areas are regulated by numerous antitrust and competition laws in the U.S., the European Union, and other jurisdictions, and Heinz may be required to obtain the approval of acquisition and joint venture transactions by competition authorities, as well as satisfy other legal requirements. The failure to obtain such approvals could materially and adversely affect Heinz’s results. If Heinz is unable to efficiently integrate acquisitions and joint ventures into its existing operations, it may not achieve the expected benefits of such transactions.

Heinz’s operations face significant foreign currency exchange rate exposure, which could negatively impact its operating results.

Heinz holds assets and incurs liabilities, earns revenue, and pays expenses in a variety of currencies other than the U.S. dollar, primarily the British Pound, Euro, Australian dollar, Canadian dollar, and New Zealand

 

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dollar. Heinz’s consolidated financial statements are presented in U.S. dollars, and therefore Heinz must translate its assets, liabilities, revenue, and expenses into U.S. dollars for external reporting purposes. Increases or decreases in the value of the U.S. dollar relative to other currencies may materially and negatively affect the value of these items in Heinz’s consolidated financial statements, even if their value has not changed in their original currency. In addition, the impact of fluctuations in foreign currency exchange rates on transaction costs (i.e. the impact of foreign currency movements on particular transactions such as raw material sourcing), most notably in the U.K., could materially and adversely affect Heinz’s results.

The failure to implement Heinz’s growth plans could adversely affect Heinz’s ability to increase net income and generate cash.

The success of Heinz could be impacted by its inability to continue to execute on its growth plans regarding product innovation, implementing cost-cutting measures, improving supply chain efficiency, enhancing processes and systems, including information technology systems, on a global basis, and growing market share and volume. The failure to fully implement the plans, in a timely manner or within Heinz’s cost estimates, could materially and adversely affect Heinz’s ability to increase net income. Additionally, Heinz’s ability to pay cash dividends will depend upon its ability to generate cash and profits, which, to a certain extent, is subject to economic, financial, competitive, and other factors beyond Heinz’s control.

Heinz is increasingly dependent on information technology, and potential disruption, cyber attacks, security problems, and expanding social media vehicles present new risks.

Heinz is increasingly dependent on information technology systems to manage and support a variety of business processes and activities, and any significant breakdown, invasion, destruction, or interruption of these systems could negatively impact operations. In addition, there is a risk of business interruption and reputational damage from leakage of confidential information.

The inappropriate use of certain media vehicles by Heinz’s employees and by the public could cause brand damage or information leakage. Negative posts or comments about Heinz on any social networking website could seriously damage its reputation. In addition, the disclosure of non-public company sensitive information through external media channels could lead to information loss. Any business interruptions or damage to Heinz’s reputation could negatively impact Heinz’s financial condition and results of operations.

To service its indebtedness, Heinz require a significant amount of cash and its ability to generate cash depends on many factors beyond its control.

Heinz’s ability to make cash payments on and to refinance its indebtedness and to fund planned capital expenditures will depend on Heinz’s ability to generate significant operating cash flow in the future, and Heinz’s requirement to make dividend payments in an annual amount of approximately $720 million on the Series A Preferred Stock held by Berkshire Hathaway described below in the section entitled “Liquidity and Financial Position” beginning on page [] of this proxy statement/prospectus. This ability is, to a significant extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the combined company’s control.

Heinz’s business may not generate sufficient cash flow from operations available to enable it to pay its indebtedness, to pay the preferred stock dividend or to fund its other liquidity needs. In any such circumstance, Heinz may need to refinance all or a portion of its indebtedness, on or before maturity. Heinz may not be able to refinance any indebtedness on commercially reasonable terms or at all. If Heinz cannot service its indebtedness, it may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions and investments. Any such action, if necessary, may not be effected on commercially reasonable terms or at all. The instruments governing Heinz’s indebtedness may restrict Heinz’s ability to sell assets and Heinz use of the proceeds from such sales.

 

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If Heinz is unable to generate sufficient cash flow or are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on Heinz indebtedness, or if Heinz otherwise fail to comply with the various covenants in the instruments governing Heinz indebtedness, Heinz could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders under Heinz’s Senior Credit Facilities, or any replacement revoking credit facility in respect thereof, could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against Heinz assets, and Heinz could be forced into bankruptcy or liquidation. Heinz has pledged a significant portion of Heinz assets as collateral under Heinz’s Senior Credit Facilities. If such Senior Credit Facilities are not repaid prior to the closing of the merger, and the lenders under Heinz’s Senior Credit Facilities accelerate the repayment of borrowings, Heinz cannot assure you that Heinz will have sufficient assets to repay Heinz’s secured and unsecured indebtedness. If its operating performance declines, Heinz may in the future need to obtain waivers from the required lenders under its Senior Credit Facilities and other indebtedness instruments to avoid being in default. If Heinz breaches its covenants under the credit agreements governing its Senior Credit Facilities and seek a waiver, Heinz may not be able to obtain a waiver from the required lenders. If this occurs, Heinz would be in default under its Senior Credit Facilities, the lenders could exercise their rights, as described above, and Heinz could be forced into bankruptcy or liquidation.

The terms of the Series A Preferred Stock provide for a 9.0% per annum dividend, payment of which could adversely affect the combined company’s results of operations and could result in a net loss.

The terms of the Series A Preferred Stock provide for a 9.0% per annum dividend, or approximately $720 million per year based on the number of shares of Series A Preferred Stock currently outstanding. These dividend payments resulted in a net loss attributable to common shareholders in Heinz’s fiscal year ended December 28, 2014, despite Heinz otherwise having generated approximately $672 million in net income during that period. To the extent dividend payments to holders of the Series A Preferred Stock following the merger exceed the combined company’s net income (before taking into account such payments) in any fiscal year, a net loss would result. Even if such dividend payments do not exceed the combined company’s net income, the payment obligation will have a negative impact on the results of operations of The Kraft Heinz Company.

Risks Relating to Kraft’s Business

You should read and consider risk factors specific to Kraft’s business that will also affect the combined company after the merger. These risks are described in the sections entitled “Risk Factors” in Kraft’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and Kraft’s Quarterly Report on Form 10-Q for the period ended March 28, 2015, and in other documents incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus for the location of information incorporated by reference into this proxy statement/prospectus.

 

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INFORMATION ABOUT THE SPECIAL MEETING

General

This proxy statement/prospectus is being provided to Kraft shareholders as part of a solicitation of proxies by the Kraft board for use at the special meeting to be held at the time and place specified below, and at any adjournment or postponement thereof. This proxy statement/prospectus provides Kraft shareholders with the information they need to know to be able to vote or instruct their vote to be cast at the special meeting.

Date, Time and Place

The special meeting will be held at the [], on [], 2015 at [], [CDT].

Purpose of the Special Meeting

At the special meeting, Kraft shareholders will be asked to consider and vote on:

 

    a proposal to approve the Agreement and Plan of Merger, which we refer to as the merger agreement, dated as of March 24, 2015, among Heinz, merger sub I, merger sub II and Kraft, a copy of which is included as Annex A to the proxy statement/prospectus of which this notice forms a part, which we refer to as the merger proposal;

 

    a proposal to approve, by non-binding, advisory vote, the compensation that may become payable to Kraft’s named executive officers in connection with the merger, which we refer to as the compensation proposal; and

 

    a proposal to approve one or more adjournments of the special meeting, if necessary or appropriate, including adjournments to permit further solicitation of proxies in favor of the proposal to approve the merger agreement, which we refer to as the adjournment proposal.

Recommendation of the Kraft Board

After careful consideration, the Kraft board has unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby, and directed that the merger agreement be submitted to a vote at a meeting of the Kraft shareholders. The Kraft board accordingly unanimously recommends that Kraft shareholders vote “FOR” the merger proposal, “FOR” the compensation proposal and “FOR” the adjournment proposal.

Record Date; Shareholders Entitled to Vote

The Kraft board has fixed the close of business on [], 2015 as the record date, which we refer to as the record date, for determination of Kraft shareholders entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof unless a new record date is fixed for any such adjournment or postponement. Only holders of record of issued and outstanding Kraft common stock at the close of business on the record date are entitled to receive notice of, and to vote at, the special meeting or any adjournments or postponements thereof.

At the close of business on the record date, there were [] shares of Kraft common stock issued and outstanding and entitled to vote at the special meeting. Kraft shareholders are entitled to one vote for each share of Kraft common stock they owned as of the close of business on the record date.

 

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Voting by Kraft’s Directors and Executive Officers

At the close of business on the record date, directors and executive officers of Kraft and their affiliates were entitled to vote approximately [] shares of Kraft common stock, or approximately []% of the shares of Kraft common stock outstanding on that date. Approval of the merger proposal requires the affirmative vote of a majority of the total issued and outstanding shares of Kraft common stock on the same date. We currently expect that Kraft’s directors and executive officers will vote their shares in favor of each of the proposals to be considered at the special meeting, although none of them has entered into any agreement obligating them to do so.

Quorum

A majority of the shares of Kraft common stock issued and outstanding as of the close of business on the record date and entitled to vote, present in person or represented by proxy, at the special meeting will constitute a quorum for the special meeting. At any adjourned meeting at which a quorum shall be present, any business may be transacted that might have been transacted at the original meeting.

Abstentions and broker non-votes are counted as present for purposes of determining a quorum. A broker non-vote occurs when a nominee holds shares for a beneficial owner but cannot vote on a proposal because the nominee does not have the discretionary power and has not received instructions from the beneficial owner.

Required Vote

Approval of the merger proposal requires the affirmative vote of a majority of the outstanding Kraft common stock. Shares not present, and shares present and not voted, whether by broker non-vote, abstention or otherwise, will have the same effect as votes cast “AGAINST” the merger proposal.

For the compensation proposal and the adjournment proposal to be approved, votes cast “FOR” each proposal must exceed votes cast “AGAINST.” Shares present and not voted, whether by broker non-vote, abstention or otherwise, will not be counted “FOR” or “AGAINST” the compensation proposal or the adjournment proposal.

Failure to Vote, Broker Non-Votes and Abstentions

In accordance with the rules of NASDAQ, brokers, banks, trust companies and other nominees who hold shares of Kraft common stock in “street name” for their customers but do not have discretionary authority to vote the shares may not exercise their voting discretion with respect to the merger proposal, the compensation proposal or the adjournment proposal. Accordingly, if brokers, banks, trust companies or other nominees do not receive specific voting instructions from the beneficial owner of such shares, they may not vote such shares with respect to the merger proposal, the compensation proposal or the adjournment proposal.

If you fail to vote, fail to instruct your broker, bank, trust company or other nominee to vote, or mark your proxy or voting instructions to abstain, it will have the effect of a vote “AGAINST” the merger proposal.

If you fail to vote, fail to instruct your broker, bank, trust company or other nominee to vote, or mark your proxy or voting instructions to abstain, it will have no effect on the compensation proposal or the adjournment proposal.

How to Vote Your Shares

Registered shareholders may vote in any of the following ways:

 

    via the Internet at www.proxyvote.com. The Internet voting system will be available until 11:59 p.m. EDT on [], 2015;

 

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    by telephone, if you are located within the United States and Canada. Call [] (toll-free) from a touch-tone telephone. The telephone voting system will be available until 11:59 p.m. EDT on [], 2015;

 

    by returning a properly executed proxy card. Kraft must receive your proxy card before the polls close at the special meeting on [], 2015; or

 

    in person at the special meeting. Registered shareholders who attend the special meeting may vote their shares in person at the Kraft special meeting even if they previously have voted their shares.

If you hold your shares in street name, you may vote:

 

    via the Internet at www.proxyvote.com (16-digit control number is required), by telephone or by returning a properly executed voting instruction form by mail, depending upon the method(s) your broker, bank or other nominee makes available; or

 

    in person at the special meeting. To do so, you must request a legal proxy from your broker, bank or other nominee and present it at the special meeting.

Voting in Person

An admission ticket and government-issued picture identification will be required to enter the special meeting. All shareholders must have an admission ticket to attend the special meeting. Shareholders may obtain a special meeting ticket and directions to the [], where the special meeting will be held, by writing to []. If you are a registered shareholder, please indicate that in your request. If your shares are held by a bank, broker or other nominee, you must enclose evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank or other nominee. Please submit your ticket request and proof of ownership as promptly as possible in order to ensure that you receive your ticket in time for the special meeting. Admission to the special meeting will be on a first-come, first-served basis. Due to space constraints and other security considerations, we are not able to admit the guests of either shareholders or their legal proxy holders.

Voting of Proxies

When you provide your proxy, the shares of Kraft common stock represented by the proxy will be voted in accordance with your instructions. If you sign your proxy card without specifying any choices, you will have granted authority to the individuals named in the proxies solicited by Kraft, which we refer to as named proxies, to vote “FOR” each of the merger proposal, the compensation proposal and the adjournment proposal; and confer authority upon the named proxies to vote your shares in their discretion on any other matters properly presented at the special meeting. Should any matter not described in this proxy statement/prospectus be properly presented at the meeting, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment on any such matter. The Kraft board currently knows of no other business that will be presented for consideration at the special meeting.

Your vote is important. Accordingly, please submit your proxy promptly by telephone, by Internet or by mail, whether or not you plan to attend the special meeting in person.

Shares Held in the Kraft 401(k) Plan

Shares of common stock held in Kraft’s Stock Purchase Savings Plan, which we refer to as the 401(k) Plan, are held of record and are voted by the trustee of the 401(k) Plan at the direction of 401(k) Plan participants. Participants in the 401(k) Plan will be provided with a full paper set of proxy materials because of certain legal requirements. Participants in the 401(k) Plan may direct the trustee of the plan as to how to vote shares allocated to their 401(k) Plan. The cutoff date for voting for participants in the 401(k) Plan is close of business on [], 2015. The 401(k) Plan trustee will vote shares as to which they have not received direction in accordance with the terms of the plan document.

 

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Revocation of Proxies

You may revoke your proxy at any time before it is exercised in any one of three ways: (i) by giving written notice to [], (ii) by submitting a subsequently dated and properly signed proxy card or (iii) by attending the special meeting and revoking the proxy. Your attendance at the special meeting will not by itself revoke your proxy. Written notices of revocation and other communications with respect to the revocation of proxies should be addressed as follows:

[]

Please note that if your shares are held in the name of a broker, bank, trust company or other nominee, you may change your voting instructions by submitting new voting instructions to your broker, bank, trust company or other nominee in accordance with its established procedures.

Solicitation of Proxies

Directors, officers and other employees of Kraft may solicit proxies by telephone, facsimile or mail, or by meetings with shareholders or their representatives. Kraft will reimburse brokers, banks or other custodians, nominees and fiduciaries for their charges and expenses in forwarding proxy material to beneficial owners. Kraft has engaged Innisfree to solicit proxies for the special meeting for a fee of $30,000, plus an additional nominal fee per incoming call and outgoing telephone contact and the payment of its out-of-pocket expenses. All expenses of solicitation of proxies will be borne by Kraft.

Proposal No. 1—Approval of the Merger Proposal

(Item 1 on the Kraft proxy card)

This proxy statement/prospectus is being furnished to you as a Kraft shareholder as part of the solicitation of proxies by the Kraft board for use at the special meeting to consider and vote upon the merger proposal.

The merger cannot be completed without the approval of the merger proposal by the affirmative vote of a majority of the outstanding Kraft shares. If you do not vote, the effect will be the same as a vote against approving the merger agreement. The merger agreement is attached as Annex A to this proxy statement/prospectus.

The Kraft board has unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby.

The Kraft board unanimously recommends that Kraft shareholders vote “FOR” the merger proposal.

Proposal No. 2—Approval of the Compensation Proposal

(Item 2 on the Kraft proxy card)

The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, requires that Kraft provide shareholders with the opportunity to cast a non-binding, advisory vote on the compensation that may become payable to Kraft’s named executive officers in connection with the merger, as disclosed in this proxy statement/prospectus, including as described in “Financial Interests of Kraft Directors and Executive Officers in the Merger” beginning on page []. This vote is commonly referred to as a “golden parachute say on pay” vote. This non-binding, advisory proposal relates only to already existing contractual obligations of Kraft that may result in a payment to Kraft’s named executive officers in connection with, or following, the consummation of the merger and does not relate to any new compensation or other arrangements between Kraft’s named executive

 

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officers and Heinz or, following the consummation of the merger, Heinz, Kraft and their respective affiliates. Further, this proposal does not relate to any compensation arrangement that may become applicable to Kraft’s directors or executive officers who are not named executive officers.

As an advisory vote, the compensation proposal is not binding upon Kraft or the Kraft board, and approval of the compensation proposal is not a condition to completion of the merger. The vote on executive compensation payable in connection with the merger is a vote separate and apart from the vote to approve the merger agreement. Accordingly, you may vote for the merger proposal and vote against the compensation proposal and vice versa. Because the vote is advisory in nature only, it will not be binding on Kraft. Accordingly, to the extent that Kraft is contractually obligated to pay the compensation, such compensation will be payable, subject only to the conditions applicable thereto, if the merger is consummated and regardless of the outcome of the advisory vote. The change of control payments are a part of Kraft’s comprehensive executive compensation program and are intended to align Kraft’s named executive officers’ interests with yours as shareholders by ensuring their continued retention and commitment during critical events such as the merger, which may create significant personal uncertainty for them.

The Kraft board unanimously recommends that Kraft shareholders vote “FOR” the compensation proposal.

Proposal No. 3—Approval of the Adjournment Proposal

(Item 3 on the Kraft proxy card)

Kraft shareholders are being asked to grant authority to proxy holders to vote in favor of one or more adjournments of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. Kraft intends to move to adjourn the special meeting in order to enable the Kraft board to solicit additional proxies for approval of the proposal to approve the merger agreement if, at the special meeting, the number of shares of Kraft common stock present or represented and voting in favor of the proposal to approve the merger agreement is insufficient to approve the proposal.

If the Kraft shareholders approve the adjournment proposal, Kraft could adjourn the special meeting and any adjourned session of the special meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from Kraft shareholders who have previously voted. If, after the adjournment, a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.

The Kraft board unanimously recommends that that Kraft shareholders vote “FOR” the adjournment proposal.

Other Matters to Come Before the Kraft Special Meeting

No other matters are intended to be brought before the Kraft special meeting by Kraft, and Kraft does not know of any matters to be brought before the special meeting by others. If, however, any other matters properly come before the special meeting, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment on any such matter.

 

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THE PARTIES TO THE MERGER

Kraft Foods Group, Inc.

Three Lakes Drive

Northfield, Illinois 60093

(847) 646-2000

Kraft Foods Group, Inc., a Virginia corporation, is one of the largest consumer packaged food and beverage companies in North America and worldwide with net revenues of $18.2 billion and earnings before income taxes of $1.4 billion in 2014. Kraft manufactures and markets food and beverage products, including cheese, meats, refreshment beverages, coffee, packaged dinners, refrigerated meals, snack nuts, dressings, and other grocery products, primarily in the United States and Canada, under a host of iconic brands. Kraft is headquartered in Northfield, Illinois.

Kraft common stock is listed on NASDAQ under the symbol “KRFT.”

H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

H.J. Heinz Holding Corporation, a Delaware corporation, was formed in 2013 in connection with the acquisition of H. J. Heinz Company by 3G Capital and Berkshire Hathaway. For more information on the 2013 Merger, see the section entitled “The 2013 Merger” beginning on page [] of this proxy statement/prospectus.

Heinz, through its subsidiaries, manufactures and markets an extensive line of food products throughout the world. Heinz’s principal products include ketchup, condiments and sauces, frozen food, soups, beans and pasta meals, infant nutrition and other food products. Famous for its iconic brands on six continents, Heinz provides delicious, nutritious and convenient foods for families in 200 countries around the world.

Kite Merger Sub Corp.

c/o H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

Kite Merger Sub Corp., a Virginia corporation and a wholly owned subsidiary of Heinz, was formed solely for the purpose of facilitating the merger and the other transactions contemplated by the merger agreement. We refer to Kite Merger Sub Corp. as merger sub I. Merger sub I has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, at the closing of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of The Kraft Heinz Company.

 

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Kite Merger Sub LLC

c/o H.J. Heinz Holding Corporation

One PPG Place, Suite 3200

Pittsburgh, Pennsylvania 15222

(412) 456-5700

Kite Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Heinz, was formed solely for the purpose of facilitating the merger and the other transactions contemplated by the merger agreement. We refer to Kite Merger Sub LLC as merger sub II. Merger sub II has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. Pursuant to the merger agreement, immediately after the merger, Kraft, as the corporation surviving the merger, will be merged with and into merger sub II, with merger sub II surviving the subsequent merger as a wholly owned subsidiary of The Kraft Heinz Company.

 

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THE MERGER

This section describes the merger and the other transactions contemplated by the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger and the other transactions contemplated by the merger agreement that is important to you. You are encouraged to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Heinz or Kraft. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Kraft makes with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

Merger and Internal Transactions

Pursuant to the merger agreement, at the closing of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a wholly owned subsidiary of The Kraft Heinz Company. Immediately following the effective time of the merger, Kraft, as the surviving corporation in the merger, will be merged with and into merger sub II, with merger sub II surviving the subsequent merger as a wholly owned subsidiary of The Kraft Heinz Company. Immediately following the effective time of the subsequent merger, The Kraft Heinz Company will engage in the internal transactions.

Merger Consideration

At the effective time of the merger, each share of Kraft common stock issued and outstanding immediately prior to the effective time of the merger (other than deferred shares and restricted shares in Kraft) will be converted automatically into the right to receive, in accordance with the terms of the merger agreement, the merger consideration, which consists of one share of Kraft Heinz common stock. In addition, the holders of record of the outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger will each be entitled to receive the special cash dividend of $16.50 per share in respect of such shares of Kraft common stock held by them. The special cash dividend will not be paid to Kraft shareholders unless the merger is completed.

Pre-Closing Heinz Share Conversion

Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. In connection with the amendment of the Heinz charter, each share of Heinz common stock issued and outstanding immediately prior to the effective time of the merger (including shares of Heinz common stock to be issued pursuant to the equity investment) will be reclassified and changed into 0.443332 of a share of Heinz common stock, which we refer to as the pre-closing Heinz share conversion. No fractional shares of Heinz common stock will be issued in connection with the pre-closing Heinz share conversion, and each holder of shares of Heinz common stock converted pursuant to the pre-closing Heinz share conversion who would otherwise have been entitled to receive a fraction of a share of Heinz common stock will receive cash in lieu thereof in accordance with the new Kraft Heinz charter. In connection with the pre-closing Heinz share conversion, the number of shares of Heinz common stock issuable upon the exercise of the Berkshire warrant will automatically be adjusted in accordance with the terms of the Berkshire warrant.

Equity Investments

In connection with the merger, Berkshire Hathaway and 3G Global Food Holdings have committed to purchase, or cause the purchase of, newly issued Heinz common stock immediately prior to the amendment of the Heinz charter (which amendment will occur immediately prior to the closing of the merger) and prior to the

 

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closing of the merger for an aggregate purchase price of $10 billion. Each of their respective commitments is subject to the satisfaction or waiver by Heinz, on or before the closing of the merger, of all of the conditions precedent to Heinz’s obligations to consummate the merger, as well as to the concurrent funding of the other’s commitment.

Ownership of the Combined Company

As of the date of the registration statement of which this proxy statement/prospectus forms a part, entities affiliated with 3G Capital owned 425,000,000 shares of Heinz common stock (equal to approximately 46% of the Heinz common stock on a fully diluted basis) and Berkshire Hathaway owned 425,000,000 shares of Heinz common stock and, by exercising the Berkshire warrant, was entitled to receive an additional 46,195,652 shares of Heinz common stock (equal to, in the aggregate, approximately 51% of the Heinz common stock on a fully diluted basis). The remaining 3% of the fully diluted Heinz common stock was held by Heinz directors and management, including in the form of Heinz stock options and Heinz restricted stock units. In addition, 80,000 shares of Series A Preferred Stock were issued and outstanding and held by Berkshire Hathaway.

As a result of the equity investments, the pre-closing Heinz share conversion and the merger, we expect that:

 

    on a fully diluted basis, approximately 51% of the outstanding Kraft Heinz common stock will be held by shareholders that were shareholders (or were affiliates of shareholders) of Heinz immediately prior to the effectiveness of the merger (including 3G Global Food Holdings and Berkshire Hathaway) and approximately 49% of the outstanding Kraft Heinz common stock will be held by shareholders that were Kraft shareholders immediately prior to the effectiveness of the merger;

 

    to the extent not exercised prior to the consummation of the merger, the Berkshire warrant will remain outstanding and will be exercisable for shares of Kraft Heinz common stock; and

 

    the 80,000 shares of Series A Preferred Stock will remain issued and outstanding with substantially identical terms.

Debt Matters

Kraft

As of the date of this proxy statement/prospectus, Kraft had approximately $10 billion of long-term indebtedness outstanding, consisting of (i) various series of senior unsecured notes issued under the Indenture, dated as of June 4, 2012, by and between Kraft and Deutsche Bank Trust Company Americas, as trustee, which we refer to as the 2012 Indenture, and (ii) a series of 7.55% Debentures due 2015, which we refer to as the Kraft debentures, issued under the Indenture by and between Kraft (as successor to Nabisco, Inc.) and Deutsche Bank Trust Company Americas, as successor trustee, dated as of June 5, 1995. Kraft is also party to the Five-Year Revolving Credit Agreement, by and among Kraft, the lenders named therein and JPMorgan Chase Bank, N.A. and Barclays Bank PLC, as administrative agents, providing for a $3.0 billion revolving credit facility, which we refer to as the Kraft revolving credit facility. There were no amounts drawn under the Kraft revolving credit facility as of the date of this proxy statement/prospectus.

Kraft’s 1.625% Senior Notes due 2015 issued under the 2012 Indenture, which we refer to as the Kraft 1.625% notes, and the Kraft debentures each mature in June 2015. The merger agreement provides that Kraft may refinance or repay the Kraft 1.625% notes and the Kraft debentures on such terms as will be determined by Kraft in its sole discretion after reasonable consultation with Heinz at any time prior to the closing date. Heinz and Kraft have also agreed in the merger agreement to use their respective reasonable best efforts to cooperate in connection with the refinancing of this indebtedness on the closing date, if not previously refinanced or repaid by Kraft. In addition, the merger agreement also provides that all amounts outstanding under the Kraft revolving credit facility, if any, will be repaid on the closing date. Heinz and Kraft anticipate that the Kraft 1.625% notes and the Kraft debentures will be refinanced at maturity through a drawing under the Kraft revolving credit facility and cash on hand.

 

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Heinz and Kraft expect that all other series of senior unsecured notes outstanding under the 2012 Indenture will remain outstanding following the closing date. The 2012 Indenture requires Kraft (or any successor to Kraft) to offer to repurchase all outstanding notes of a series at 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of repurchase if Kraft undergoes a change of control and the credit rating of the relevant series is downgraded to below investment grade by each of Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services within 60 days after the change of control. Because the merger will constitute a change of control of Kraft, if the credit ratings of any series of notes issued pursuant to the 2012 Indenture are downgraded to below investment grade within 60 days following the effectiveness of the merger, H. J. Heinz Company will be required to offer to repurchase all outstanding notes of each such series on such terms. However, based on discussions with credit rating agencies on March 16, 2015 regarding details of the consideration to be paid in connection with the merger, the proposed capital structure of the combined company, including the proposed refinancing of certain indebtedness of Heinz outstanding prior to the consummation of the merger, the anticipated value creation and synergies of the merger and the anticipated timing of closing of the merger, Heinz anticipates that these notes will continue to be rated investment grade following the closing date and that H. J. Heinz Company will not be required to make a change of control offer.

Heinz

As of the date of this proxy statement/prospectus, Heinz had approximately $13.6 billion of long-term indebtedness outstanding, consisting of:

 

    $6.4 billion of secured term loans outstanding under the Credit Agreement, dated as of June 7, 2013, among H. J. Heinz Company, as the borrower, H. J. Heinz Corporation II, as holdings, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, and the lenders party thereto, which we refer to as the Heinz credit agreement;

 

    $2.0 billion of 4.875% second lien senior secured Notes due 2025, which we refer to as the Heinz 2025 notes, issued under the Indenture, dated as of January 30, 2015, among H. J. Heinz Company, as the issuer, H. J. Heinz Corporation II, as a guarantor, the other guarantors party thereto from time to time, MUFG Union Bank, N.A., as trustee, and Wells Fargo Bank, National Association, as collateral agent;

 

    $3.1 billion of 4.25% Second Lien Senior Secured Notes due 2020, which we refer to as the Heinz 2020 notes, issued under the Indenture, dated as of April 1, 2013, among H. J. Heinz Company, as the issuer, H. J. Heinz Corporation II, as a guarantor, the other guarantors party thereto from time to time, and Wells Fargo Bank, National Association, as trustee and collateral agent, as supplemented by the Supplemental Indenture, dated as of June 7, 2013;

 

    $1.9 billion of various series of unsecured senior notes issued or guaranteed by H. J. Heinz Company, which we refer to as the Heinz unsecured notes; and

 

    £125 million of 6.25% guaranteed notes due 2030 issued by H.J. Heinz Finance UK Plc under a fiscal agency agreement dated February 18, 2000, between H.J. Heinz Finance UK Plc, as issuer, H. J. Heinz Company, as the guarantor, and Royal Bank of Canada Europe Limited, as fiscal and principal paying agent, which we refer to as the Heinz GBP notes.

Heinz intends to refinance, on or prior to the closing date, all of its outstanding indebtedness under the Heinz credit agreement and the Heinz 2020 notes and $800 million in aggregate principal amount of the Heinz 2025 notes through a redemption provision applicable to the 2025 notes (i.e., call, equity claw and/or make-whole) or otherwise as permitted thereunder. In addition, Heinz intends to terminate the Heinz credit agreement concurrently with the closing of the merger. On the closing date, Heinz also intends to incur approximately $1.4 billion of new unsecured additional indebtedness to replace the aggregate amount of the Kraft 1.625% notes and the Kraft debentures that will mature prior to the closing of the merger. The merger agreement provides that Kraft will use its reasonable best efforts to provide reasonable cooperation with Heinz in arranging and consummating any refinancing that Heinz deems reasonably necessary or advisable in connection with the transactions contemplated by the merger agreement.

Closing of the merger is not subject to any debt financing condition or contingency.

 

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Background of the Merger

On January 20, 2015, Mr. Alexandre Behring, the Chairman of the Heinz board and the Managing Partner of 3G Capital, called Mr. John Cahill, the Chief Executive Officer of Kraft and the Chairman of the Kraft board, to arrange a meeting.

Also on January 20, 2015, Mr. Cahill informed a representative of Centerview, which had been providing other financial advisory services to Kraft at such time, about his call with Mr. Behring. Mr. Cahill asked Centerview to assist him in preparing for the meeting between himself and Mr. Behring.

On January 27, representatives of Centerview reviewed with members of Kraft senior management Centerview’s preliminary perspectives on Kraft’s standalone financial plan, which we refer to as the 2015 Financial Plan, which Kraft senior management was in the process of reviewing and updating at Mr. Cahill’s request following his becoming Chief Executive Officer of Kraft in December 2014. Centerview also reviewed tactical and strategic alternatives for Kraft, including potential dispositions or spin-offs of certain Kraft business units and potential merger opportunities, including a business combination with Heinz, as well as the impact that each of such alternatives would have on Kraft.

On January 28, 2015, Mr. Behring and Mr. Cahill met in Wheeling, Illinois. During the meeting, Mr. Behring indicated Heinz’s desire to pursue a business combination of Kraft and Heinz and suggested that the two companies enter into a mutual confidentiality agreement to permit the exchange of non-public information. Mr. Cahill indicated to Mr. Behring that he would discuss with certain members of the Kraft board and that, subject to their agreement, he would agree to share certain limited financial information about Kraft that would allow Heinz to analyze potential terms of such a business combination and formulate a proposal. Mr. Cahill informed certain members of the Kraft board, including Mackey McDonald, Terry Lundgren, L. Kevin Cox and John Pope, as well as Ms. Kim K. W. Rucker, the Executive Vice President, Corporate & Legal Affairs, General Counsel and Corporate Secretary of Kraft, of his meeting and conversation with Mr. Behring. The members of the Kraft board and Kraft senior management with whom Mr. Cahill discussed Heinz’s desire to pursue a business combination were supportive of sharing limited financial information about Kraft with Heinz.

On January 29, 2015, Kraft and Heinz entered into a mutual confidentiality agreement in order to share certain non-public information about their respective businesses. Among other terms, the confidentiality agreement contained a standstill obligation prohibiting each party and its affiliates and representatives, for a specified period and subject to certain exceptions, from participating in an acquisition of securities of the other party, soliciting any proxies with respect to the voting of any common stock of the other party or seeking representation, control or influence over the board of directors of the other party, in each case without the written consent of such other party.

Also on January 29, 2015, at Mr. Cahill’s request, representatives of Centerview met with Mr. Behring in New York. During that meeting, Mr. Behring indicated the intention of Heinz and 3G Capital to make a formal proposal for a business combination between Kraft and Heinz. Following the meeting, representatives of Centerview communicated this indication to Mr. Cahill.

On February 4, 2015, Mr. Cahill met with Mr. Behring and representatives of each of Centerview and Lazard Frères & Co. LLC, which we refer to as Lazard, in New York. During the meeting, Mr. Behring reviewed with Mr. Cahill and the representatives of Centerview 3G Capital’s investment track record and operating philosophy.

On February 8, 2015, Mr. Behring (on behalf of Heinz and 3G Capital), Mr. Warren Buffett, Chairman and CEO of Berkshire Hathaway (on behalf of Berkshire Hathaway), and Mr. Jorge Paulo Lemann, Partner and Co-Founder of 3G Capital (on behalf of 3G Capital), provided Centerview with a written proposal addressed to Mr. Cahill setting forth a preliminary non-binding indication of interest for a proposed combination of Kraft and

 

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Heinz. Such proposal included (i) a $10 billion additional equity investment by 3G Capital and Berkshire Hathaway in Heinz, (ii) a cash payment of $12.50 per share to Kraft’s existing shareholders in the form of a special dividend, (iii) a stock-for-stock merger that would result in a 47% ownership interest in the combined entity by the current shareholders of Kraft and a 53% ownership interest by current shareholders and management of Heinz and (iv) certain governance matters, including an 11 member board of directors for the combined company, which would be comprised of three directors designated by 3G Capital, three directors designated by Berkshire Hathaway and five directors designated by the Kraft board.

On February 9, 2015, there was a meeting of the Kraft board to discuss the proposal received from Heinz, 3G Capital and Berkshire Hathaway. Ms. Rucker was also present. During the meeting, Mr. Cahill informed the Kraft board that Kraft senior management had approached Centerview, as a potential financial advisor, and Sullivan & Cromwell LLP, which we refer to as Sullivan & Cromwell, as a potential outside legal advisor, to advise Kraft in connection with a potential transaction with Heinz and the exploration of potential strategic alternatives the Kraft board may consider in connection with its review thereof. Mr. Cahill noted Centerview’s strong reputation and experience, Mr. Cahill’s prior experience in working with Centerview and Kraft’s relationship with Centerview and proposed that Centerview be engaged to advise Kraft in connection with the potential transaction with Heinz as well. The Kraft board discussed the selection of advisors and approved the engagement of both Centerview and Sullivan & Cromwell in connection with a potential transaction. Mr. Cahill then provided the Kraft board with an overview of the preliminary, non-binding merger proposal received on February 8, 2015 on behalf of Heinz, Berkshire Hathaway and 3G Capital, including a summary of the transaction terms and structure being proposed and preliminary views on the proposed transaction with respect to potential synergies, key considerations and key work streams that had been prepared by Centerview and provided to Mr. Cahill. Ms. Rucker reviewed with the Kraft board the directors’ fiduciary duties in connection with their consideration of the proposed transaction with Heinz. The Kraft board discussed the proposal from Heinz and other options for Kraft, including the 2015 Financial Plan, and other strategic alternatives. After further discussion, the Kraft board determined that the preliminary, non-binding merger proposal from Heinz undervalued Kraft, but authorized Mr. Cahill to work with Kraft’s advisors to further explore a transaction with Heinz and have further discussions with Heinz, 3G Capital and Lazard. The Kraft board also authorized Mr. Cahill to work with Centerview to consider and review the 2015 Financial Plan and authorized Mr. Cahill to arrange meetings with the CEOs of two other companies, which we refer to as Company A and Company B, for the purpose of discussing with each the food and beverages industry generally and ways in which Kraft could work together with such other companies to create value for their respective shareholders.

During the weeks of February 9 and February 16, 2015, pursuant to the discussion at the February 9, 2015 meeting of the Kraft board, representatives of Centerview and Kraft senior management further reviewed the 2015 Financial Plan, potential sensitivities to it and the financial impact of various scenarios, consideration around industry consolidation, preliminary analyses of a potential transaction with Heinz and perspectives on potential strategic alternatives. During this time, Mr. Cahill also reached out by phone to the CEOs of Company A and Company B to set up meetings. The meeting with Company A was set for March 4, 2015; the CEO for Company B informed Mr. Cahill that he was unable to meet with Mr. Cahill in March and suggested an April meeting date instead.

On February 10, 2015, at the direction of the Kraft board, representatives of Centerview called representatives of Lazard to inform them that Heinz’s preliminary, non-binding merger proposal was insufficient as a basis for Kraft to proceed with the exploration of the proposed transaction.

On February 11, 2015, representatives of each of Centerview, 3G Capital and Lazard met to discuss the differences in their respective valuations for Heinz and Kraft.

On February 20, 2015, representatives of each of Centerview, 3G Capital and Lazard met to further discuss Heinz’s preliminary, non-binding merger proposal. The representatives of 3G Capital offered their perspectives regarding the financial benefits of the proposed combination of Kraft and Heinz and the representatives of

 

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Centerview shared with the representatives of 3G Capital and Lazard certain financial projections for Kraft prepared by Kraft senior management. The representatives of Centerview restated the previously communicated view of the Kraft board that the February 8, 2015 proposal was not an adequate basis to proceed.

On February 24, 2015, representatives of Lazard met with representatives of Centerview to share additional perspectives on the attractiveness of the proposed transaction to Kraft shareholders. During this meeting, the representatives of Lazard indicated on behalf of 3G Capital a likelihood of increasing either the proposed ownership percentage of Kraft’s shareholders in the combined company on a fully diluted basis from 47% to 48% or the special dividend from $12.50 to $15.00. Following the meeting, representatives of Centerview communicated the potential for this revised proposal to Mr. Cahill.

Also on February 24, 2015, Mr. Cahill discussed Heinz’s proposal with Ms. Rucker; Mr. James Kehoe, who had been appointed to assume the role of Executive Vice President and Chief Financial Officer of Kraft effective March 1, 2015; Mr. Christopher Kempczinski, the Executive Vice President, Growth Initiatives and President of International of Kraft; Mr. George Zoghbi, the Chief Operating Officer of Kraft; and Ms. Diane Johnson May, the Executive Vice President, Human Resources of Kraft. We refer to this group collectively as the Kraft senior executive team.

On March 2, 2015, there was a meeting of the Kraft board which was also attended by Ms. Rucker and representatives of each of Centerview and Sullivan & Cromwell. Mr. Cahill and the representatives of Centerview reviewed with the Kraft board an overview of the process undertaken to date by Kraft in developing Kraft’s strategy going forward and the 2015 Financial Plan. The representatives of Centerview reviewed with the Kraft board various potential organic and inorganic strategic alternatives that Kraft could consider, including dispositions or spin-offs of certain Kraft business units and merger opportunities, including with Company A and Company B, as well as the impact that each of such alternatives would have on Kraft. The representatives of Centerview also discussed with the Kraft board that other potential strategic food and beverage partners appeared either less attractive or less actionable than each of Heinz, Company A and Company B. The representatives of Centerview also reviewed with the Kraft board the possibility of revisions to the Heinz proposal that had been indicated by Lazard during the February 24, 2015 meeting, offering their perspectives on potential levels of cost synergies, ownership split and cash dividend amounts. After discussion, the Kraft board authorized Kraft senior management and the representatives of Centerview to communicate to 3G Capital that, although the Kraft board was strategically interested in a potential transaction, 3G Capital’s revised indication was not an adequate basis to proceed and directed them to continue their negotiations with Heinz, 3G Capital and their advisors. The representatives of Centerview also disclosed orally to the Kraft board during the meeting Centerview’s financial advisory and other relationships with the parties to the potential transaction to allow the Kraft board to assess Centerview’s independence, which information Centerview later confirmed in writing. After such discussion, the Kraft board met in executive session and a representative of Sullivan & Cromwell reviewed with the Kraft board the directors’ fiduciary duties in connection with their consideration of a transaction with Heinz, or any other strategic transaction. The representative of Sullivan & Cromwell then left the meeting, and the Kraft board continued to meet in executive session, first with Mr. Cahill and then with independent directors only.

On March 3, 2015, Mr. Cahill called Mr. Behring to inform him that the Kraft board was strategically interested in a potential transaction with Heinz but that the economic terms proposed by Heinz remained inadequate. Mr. Cahill requested that representatives of Centerview meet with representatives of 3G Capital and Lazard to discuss more fully Kraft’s and Heinz’s perspectives on valuations of the two companies.

On March 4, 2015, as discussed at the February 9, 2015 meeting of the Kraft board, Mr. Cahill met with the CEO of Company A to discuss the food and beverages industry generally and ways in which the two companies could work together to create value for their respective shareholders. There were no discussions regarding any specific transaction and no specific proposals were made.

Also on March 4, 2015, representatives of Centerview met on behalf of Kraft with representatives of 3G Capital and Lazard and, consistent with the Kraft board’s direction, communicated the Kraft board’s willingness

 

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to proceed with the exploration of a transaction providing for 50% ownership of the combined company on a fully diluted basis by Kraft’s stockholders and payment of a special cash dividend of $16.00 per share of Kraft common stock to Kraft’s shareholders.

On March 6, 2015, Mr. Cahill received a call from Mr. Behring. During this call, Mr. Behring informed Mr. Cahill that Heinz would provide a revised offer, with the terms of such offer to be communicated by Lazard to Centerview. Mr. Behring made it clear to Mr. Cahill that this was Heinz’s best and final offer and that Heinz would not increase the consideration payable to Kraft’s shareholders any further. Mr. Behring also expressed his views to Mr. Cahill that an expeditious process would be in the best interests of both parties and proposed a two week time period to conduct mutual due diligence, negotiate the merger agreement and announce the transaction. Later that day, at the direction of 3G Capital and Heinz, representatives of Lazard communicated to representatives of Centerview a revised offer pursuant to which Kraft shareholders would own 49% of the combined company on a fully diluted basis and receive a pre-closing special cash dividend of $16.50 per share of Kraft common stock and provided Centerview with a non-binding letter from Heinz, 3G Capital and Berkshire Hathaway confirming such proposal to Mr. Cahill.

On March 8, 2015, there was a meeting of the Kraft board which was also attended by Ms. Rucker and representatives of each of Centerview and Sullivan & Cromwell. Mr. Cahill provided the Kraft board with an update on the status of the discussions between Kraft and Heinz since the last Kraft board meeting on March 2, 2015, including Heinz’s “best and final” offer made on March 6, 2015. Mr. Cahill informed the Kraft board that the purpose of the meeting was not for the Kraft board to make a decision as to whether to enter into a transaction with Heinz, but rather for the Kraft board to make a decision as to whether it wanted to continue to explore the potential transaction based on the Heinz “best and final” offer, including by proceeding to negotiate with Heinz and to perform detailed mutual due diligence. A representative of Centerview reviewed Centerview’s preliminary valuation analyses of the March 6, 2015 proposal and discussed with the Kraft board certain key governance items that had not yet been negotiated with Heinz. After discussion, the Kraft board authorized Mr. Cahill to continue to work with Kraft’s advisors to consider the Heinz proposal based on the Heinz “best and final” offer, have discussions and negotiations with Heinz, 3G Capital and their advisors and engage in detailed mutual due diligence with Heinz.

On March 9, 2015, representatives of Lazard sent an initial draft of the merger agreement to Centerview. Among other terms, the draft merger agreement provided for a termination fee of $1.85 billion payable by Kraft upon certain circumstances, which would be in addition to any other remedies available to Heinz, an obligation for Kraft to reimburse an uncapped amount of out of pocket fees and expenses of Heinz if the merger agreement was terminated due to a failure of Kraft to obtain shareholder approval for the proposed transaction, a “reasonable best efforts” obligation of Heinz to obtain the agreed equity investment from 3G Capital and Berkshire Hathaway and a non-solicitation covenant requiring the Kraft board to determine that failure to take certain actions with respect to alternative or superior acquisition proposals would result in an actual breach of its fiduciary duties before taking any such actions and providing Heinz with a five business day match right, among other restrictions.

On March 10, 2015, Kraft received through representatives of Centerview a due diligence request list from Heinz and, at Mr. Cahill’s direction, representatives of Centerview sent a due diligence request list to Lazard. Both parties began collecting due diligence documents to be provided to each other for review and agreed to procedures that would allow a detailed mutual due diligence investigation while protecting commercially or competitively sensitive information.

Also on March 10, 2015, certain members of Heinz senior management, including Mr. Behring, Mr. Bernardo Hees, Chief Executive Officer of Heinz, and Mr. Paulo Basilio, Chief Financial Officer of Heinz, presented an overview of its business and the strategic rationale as well as the financial benefits of the proposed transaction to Mr. Cahill, Mr. Kehoe and Mr. Kempczinski, and Kraft’s advisors.

 

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On March 11, 2015, representatives of Sullivan & Cromwell and Cravath, Swaine & Moore LLP, which we refer to as Cravath, outside legal advisor to Heinz, had a discussion regarding Heinz’s proposed structure for the proposed transaction, as set forth in the draft merger agreement provided on March 9, 2015. The discussion involved, among other things, consideration of other structural alternatives and the tax and other consequences of such alternatives. On the same day, Heinz granted Kraft and its advisors access to an electronic data room for Kraft’s detailed due diligence review involving Heinz’s non-public information.

On March 13, 2015, Mr. Cahill, Mr. Kehoe and Mr. Kempczinski, presented an overview of Kraft’s business, including its brand portfolio, cost-saving initiatives since its separation from Mondelēz International, Inc. in 2012, growth opportunities and the 2015 Financial Plan to senior management and representatives of Heinz. Following this meeting, Mr. Cahill, Mr. Behring and representatives of Centerview and Lazard had a discussion regarding key organizational and governance matters, with both sides outlining positions for the other to consider, including (i) the location of the combined company’s headquarters, (ii) 3G Capital’s and Heinz’s proposal that the board of the combined company would be comprised of 11 directors, five of which would be current Kraft directors and six of which would be appointed by 3G Capital and Berkshire Hathaway, (iii) 3G Capital’s and Heinz’s proposal that Messrs. Hees and Behring would continue in their roles as CEO and Chairman, respectively, of the combined company and that Mr. Cahill would be the Vice Chairman of the combined company’s board, with additional board responsibilities for Mr. Cahill to be further discussed and (iv) the name of the combined company, with “The Kraft Heinz Company” being proposed by Kraft and “The Heinz Kraft Company” being proposed by Heinz. Also on March 13, 2015, representatives of Sullivan & Cromwell sent to Cravath a revised draft of the merger agreement. Among other changes from the initial draft received by Kraft on March 9, 2015, the revised draft merger agreement provided for a termination fee of $1.1 billion payable by Kraft upon certain circumstances, which would be the sole and exclusive remedy of Heinz if paid, no obligation for Kraft to reimburse Heinz for any of its fees and expenses if the merger agreement was terminated due to a failure of Kraft to obtain shareholder approval for the proposed transaction, an unqualified obligation of Heinz to obtain the agreed equity investment from 3G Capital and Berkshire Hathaway and, with respect to Kraft’s non-solicitation obligation, that the Kraft board would be permitted to take certain actions with respect to alternative or superior acquisition proposals even if it only determined that a failure to do so would reasonably be expected to be inconsistent with the Kraft board’s fiduciary duties and a match right for Heinz of three business days instead of the five business days initially proposed by Heinz.

In addition, on March 13, 2015, representatives of Centerview confirmed in writing to Kraft certain information previously provided orally to the Kraft board regarding Centerview’s financial advisory and other relationships with the parties to the transaction and other information to allow the Kraft board to assess Centerview’s independence, including the information described under the section entitled “Opinion of Kraft’s Financial Advisor—General.”

On March 14, 2015, Kraft granted Heinz and its advisors access to an electronic data room for Heinz’s detailed due diligence review involving Kraft’s non-public information. Until the execution of the merger agreement on March 24, 2015, each party and its advisors continued to conduct detailed due diligence with respect to the other party, including through the non-public information that had been made available to it through the other party’s electronic data room.

On March 15, 2015, representatives of Sullivan & Cromwell received a further revised draft merger agreement from representatives of Cravath. The March 15, 2015 draft contained certain concessions compared with the initial draft provided on behalf of Heinz on March 9, 2015, including a compromise proposal for a match right period of four business days, but also provided for a termination fee of $1.5 billion payable by Kraft upon certain circumstances, which was still higher than Kraft’s proposed amount of $1.1 billion, an obligation for Kraft to reimburse an uncapped amount of reasonable and documented out-of-pocket fees and expenses of Heinz if the merger agreement was terminated due to a failure of Kraft to obtain shareholder approval for the proposed transaction and a “best efforts” obligation of Heinz to obtain the agreed equity investment from 3G Capital and Berkshire Hathaway (but still no unqualified obligation to do so).

 

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Also on March 15, 2015, there was a meeting of the Kraft board which was also attended by Ms. Rucker and representatives of each of Centerview, Bain & Company, which we refer to as Bain, and Sullivan & Cromwell. Mr. Cahill provided the Kraft board with an update on the status of discussions regarding the potential transaction involving Kraft and Heinz since the last Kraft board meeting on March 8, 2015, including the mutual due diligence review and merger agreement negotiations. Mr. Cahill also informed the Kraft board that Kraft senior management had engaged Bain on March 8, 2015 to conduct business due diligence in connection with the potential transaction, including reviewing Heinz’s financial information and potential synergies for the combined company. Mr. Cahill discussed with the Kraft board that Bain was retained based on its prior relationship in working with Kraft as well as its experience in the industry. Bain was not engaged to consider the fairness of the transaction or the consideration being proposed by Heinz. Mr. Cahill provided an overview to the Kraft board of the management presentations that took place on March 10, 2015 and March 13, 2015. A representative of Bain then reviewed with the Kraft board an overview of 3G Capital’s management and investment strategy and a summary of Heinz’s business and recent performance, its analysis of 3G Capital’s drivers of success and its plan to focus due diligence on the projected growth of Heinz’s and the combined company’s global portfolio and costs and revenue synergies. After the representatives of Bain left the meeting, a representative of Centerview provided the Kraft board with an overview of the work to be done during the following week with respect to the proposed transaction with Heinz, explaining that mutual due diligence sessions had been scheduled for the parties to review each other’s growth prospects, cost analysis and synergies perspectives. He informed the Kraft board that Kraft senior management and Kraft’s advisors would have a more advanced financial view with respect to the combined company, and have done additional work with respect to the 2015 Financial Plan, prior to the next Kraft board meeting. A representative of Centerview then updated the Kraft board on the status of negotiations between Kraft’s and Heinz’s financial and legal advisors on behalf of their respective clients relating to the merger agreement, indicating that good progress had been made but that there remained some key open points, including with respect to the governance structure for the combined company. A representative of Sullivan & Cromwell reviewed with the Kraft board the directors’ fiduciary duties in connection with their consideration of the transaction with Heinz and certain related matters. The representative of Sullivan & Cromwell then summarized employee compensation and benefits considerations in connection with the proposed transaction. After the representatives of Centerview and Sullivan & Cromwell left the meeting, the Kraft board met in executive session with Mr. Cahill and Ms. Rucker.

From March 16, 2015 through March 24, 2015, there were discussions among and with various members of the Kraft board, including Mr. Cahill, regarding which Kraft directors would serve on the board of the combined company.

On March 16, 2015, representatives of Sullivan & Cromwell and Cravath discussed the key open issues with respect to the merger agreement, including, among other terms, the amount of the termination fee, whether the termination fee should be the sole and exclusive remedy of Heinz if paid, the requested expense reimbursement payable by Kraft if the merger agreement was terminated due to Kraft’s failure to obtain shareholder approval for the proposed transaction, Heinz’s obligation to obtain the equity investment from 3G Capital and Berkshire Hathaway and certain issues relating to employee compensation and benefits matters.

Also on March 16, 2015, representatives of each of Kraft, Heinz, Berkshire Hathaway and Lazard met with credit rating agencies in New York City, New York, to discuss the potential credit rating for the combined company. Among other topics, details of the consideration to be paid in connection with the merger, the proposed capital structure of the combined company, including the refinancing of certain indebtedness of Heinz currently outstanding prior to the closing date, the anticipated value creation and synergies of the merger and the anticipated timing of closing of the merger were discussed.

During the week of March 16, 2015, Kraft engaged outside advisors to conduct employee benefits and pension and change of control related compensation due diligence.

 

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On March 17, 2015, Mr. Cahill met Mr. Lemann and Marcel Telles, each one of the founding partners of 3G Capital, in Munich (with Mr. Behring participating by phone for portions of such meeting) to discuss the business and operating strategy for the combined company.

On March 18, 2015, representatives of Sullivan & Cromwell sent a revised merger agreement to Cravath. On the same day, members of the Kraft finance, legal, compliance and human resources teams and Kraft’s advisors participated in multiple mutual business and legal due diligence conference calls with Heinz and its advisors.

On March 19, 2015, Mr. Zoghbi met with Messrs. Behring and Hees to discuss potential opportunities for the combined company. Additionally, Mr. Cahill and Mr. Behring participated in a conference call to further discuss the governance structure and business and operating strategy of the combined company, consistent with Mr. Cahill’s discussion with Messrs. Lemann and Telles earlier that week.

Also on March 19, 2015, Cravath provided initial drafts of the documents ancillary to the merger agreement, including the form of the new Kraft Heinz charter and the form of the new Kraft Heinz by-laws, which we collectively refer to as the Ancillary Transaction Documents.

On March 19, 2015 and March 20, 2015, representatives of Centerview, Lazard, Sullivan & Cromwell and Cravath discussed possible alternatives for a new board committee headed by Mr. Cahill. Based on and consistent with these discussions and further discussions they had with Mr. Cahill, representatives of Centerview and Sullivan & Cromwell outlined the framework for a new operations and strategy committee of the board of the combined company tasked with oversight of the integration process and the future strategy and ongoing operations of the combined company. This committee would be led by Mr. Cahill and include one member each of 3G Capital and Berkshire Hathaway.

Also on March 20, 2015 and March 21, 2015, Messrs. Cahill and Behring had calls during which they discussed the governance structure for the combined company, including the name for the combined company and the location of its headquarters.

On March 20, 2015, representatives of Cravath sent a further revised draft of the merger agreement to Sullivan & Cromwell. In the revised draft merger agreement, Heinz accepted an unqualified obligation to obtain the agreed equity investment, but was still proposing a termination fee of $1.5 billion payable by Kraft upon certain circumstances, which would be in addition to any other remedies available to Heinz, and an obligation for Kraft to reimburse reasonable and documented out-of-pocket fees and expenses of Heinz if the merger agreement was terminated due to a failure of Kraft to obtain shareholder approval for the proposed transaction (now subject to a cap of $20 million).

On March 21, 2015, representatives of each of Sullivan & Cromwell and Cravath had a number of discussions regarding the key remaining issues for the merger agreement, including, among other terms, the amount of the termination fee, whether such termination fee should be the sole and exclusive remedy of Heinz if paid, the expense fee payable if the merger agreement was terminated due to Kraft’s failure to obtain shareholder approval for the proposed transaction with Heinz, certain employee compensation and benefits matters and certain governance matters, including the name and location of headquarters of the combined company. During such discussions, the parties tentatively agreed, based on the prior direction provided by their respective clients, among other terms, to a termination fee of $1.2 billion, which would be the sole and exclusive remedy for Heinz if paid, and that if the merger agreement was terminated due to Kraft’s failure to obtain shareholder approval, Kraft would be obligated to reimburse Heinz for its reasonable and documented out-of-pocket fees and expenses up to a cap of $15 million.

On March 22, 2015, a representative of Lazard communicated to a representative of Centerview that the framework proposed for the operations and strategy committee of the combined board was acceptable to Heinz and 3G Capital.

 

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Also on March 22, 2015, there was a meeting of the Kraft board. Ms. Rucker, Ms. Johnson May and representatives of each of Centerview, Bain and Sullivan & Cromwell were in attendance for various portions of the meeting. Mr. Cahill provided the Kraft board with an update on the status of the proposed transaction since the last board meeting on March 15, 2015. A representative of Sullivan & Cromwell reviewed with the Kraft board its fiduciary duties in considering such proposed transaction. The Kraft board reviewed with the advisors the due diligence conducted to date on Heinz, including business, legal and accounting due diligence, joint sessions on synergy opportunities, and Heinz’s due diligence investigation on Kraft. Mr. Cahill then reviewed the continuing discussion between Kraft and Heinz on governance topics and the business and operating strategy of the combined company, including his meeting in Munich with Messrs. Lemann and Telles on March 17, 2015. He also reviewed with the Kraft board the 2015 Financial Plan and an upside case to such plan developed by Kraft senior management reflecting various cost management initiatives, which we refer to as the Upside Case of the 2015 Financial Plan (the 2015 Financial Plan and the Upside Case of the 2015 Financial Plan being referred to collectively herein as the Financial Forecasts). Representatives of each of Centerview and Bain reviewed with the Kraft board a joint overview with each of their perspectives with respect to value creation and synergies expected from the transaction compared with the 2015 Financial Plan and the Upside Case of the 2015 Financial Plan. The representatives of Centerview reviewed with the Kraft board certain preliminary pro forma financial information for the combined company, including the pro forma per share valuation sensitivities, and Centerview’s preliminary valuation analyses. Following this review, the Kraft board discussed the likelihood of Kraft being able to achieve the Upside Case of the 2015 Financial Plan, particularly with respect to cost savings initiatives, on a standalone basis, and the likelihood that Heinz could achieve the synergies they had identified for the combined company. The representatives of Centerview also reviewed with the Kraft board the preliminary feedback received from the credit rating agencies. Representatives of Centerview then reviewed with the Kraft board the proposed governance structure for the combined company and related matters that were being negotiated by Kraft’s and Heinz’s advisors on behalf of their respective clients, including having co-corporate headquarters in Pittsburgh and the Chicago metro area, the makeup of the combined company’s board (five directors appointed by Kraft and three directors appointed by each of 3G Capital and Berkshire Hathaway), that Messrs. Hees and Behring would continue in their roles as CEO and Chairman, respectively, of the combined company and that Mr. Cahill would be the Vice Chairman of the combined company’s board which would establish an operations and strategy committee (comprised of Mr. Cahill and one member each of 3G Capital and Berkshire Hathaway), that John Pope would serve as chair of the combined company’s audit committee and the combined company’s name. Representatives of Sullivan & Cromwell then reviewed with the Kraft board the terms of the merger agreement, the possible amendment of Kraft’s bylaws to add an exclusive forum provision and the material terms of the Ancillary Transaction Documents. Mr. Cahill discussed with the Kraft board his and the other members of the Kraft senior executive team’s view of the proposed transaction. The Kraft board members discussed their views of the proposed transaction and directed Kraft senior management and Kraft’s advisors to work towards finalizing the terms and documentation regarding the proposed transaction during the following days. After Mr. Cahill left the meeting, the Kraft board also met in executive session with Ms. Rucker and representatives of Sullivan & Cromwell to discuss their views of the proposed transaction. Representatives of Centerview were present for a portion of the discussions.

On March 23, 2015, Mr. Cahill had a discussion with Mr. Behring and Mr. Buffett in which Mr. Buffett expressed to Mr. Cahill his views of, and commitment to, the proposed transaction.

Also on March 23, 2015, Kraft and Centerview executed a formal engagement letter.

On March 24, 2015, representatives of Sullivan & Cromwell sent a revised draft merger agreement to Cravath, which was in substantially final form, reflecting discussions among Kraft’s and Heinz’s respective advisors during the preceding days. The final remaining points on the draft merger agreement, along with the final remaining points on the Ancillary Transaction Documents, were agreed throughout the course of the day.

Also on March 24, 2015, the Kraft senior management reviewed the ongoing due diligence process and provided their perspectives on the Adjusted Heinz Forecasts to Centerview.

 

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In the afternoon on March 24, 2015, there was a meeting of the Kraft board that was also attended by Ms. Rucker and representatives of each of Centerview and Sullivan & Cromwell. Mr. Cahill provided the Kraft board with an update on the status of the proposed transaction since the last Kraft board meeting on March 22, 2015. Representatives of Sullivan & Cromwell provided the Kraft board with an update on the legal due diligence review on Heinz, informed the Kraft board that the material terms of the merger agreement and the Ancillary Transaction Documents were consistent with the terms reviewed with the Kraft board during the March 22, 2015 board meeting and updated the Kraft board on the outcome of the terms in the merger agreement relating to employee compensation and benefits matters. Representatives of Centerview then updated the Kraft board on the resolution of the governance structure of the combined company and the results of due diligence conducted by certain of Kraft’s advisors. Representatives of Centerview informed the Kraft board that their financial analyses with respect to the combined company reflected their discussion with Kraft senior management of the results of the due diligence conducted by Kraft’s advisors. The representatives of Centerview then reviewed with the Kraft board Centerview’s financial analyses of the merger consideration and special dividend per share amount (taken together and not separately) payable to Kraft shareholders pursuant to the proposed transaction. A representative of Centerview then delivered to the Kraft board Centerview’s oral opinion, which was confirmed in writing later that day, that as of March 24, 2015 and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in its written opinion, the Consideration is fair, from a financial point of view, to the holders of shares of Kraft’s common stock (other than Excluded Shares). For a detailed discussion of Centerview’s opinion, please see below under the section entitled “Opinion of Kraft’s Financial Advisor.” The Kraft board then engaged in discussion regarding the terms of the merger agreement, the merger and the other transactions contemplated thereby and considered whether they are fair to, and in the best interest of, Kraft and its shareholders. After discussion, the Kraft board unanimously adopted a resolution concluding that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, approving and declaring it advisable that Kraft enter into the merger agreement and adopting the merger agreement, the merger and the transactions contemplated thereby. The Kraft board also unanimously adopted a resolution recommending that the shareholders of Kraft approve the merger agreement and approve and/or adopt such other matters that are submitted for their approval and/or adoption (as the case may be) in connection with the merger agreement. The Kraft board also further discussed amongst themselves which Kraft directors would serve on the board of directors of the combined company and agreed that John Cahill, L. Kevin Cox, Jeanne Jackson, Mackey McDonald and John Pope would be the five current Kraft directors that should be on the board of directors of the combined company. In addition, the Kraft board unanimously adopted resolutions to amend the Amended and Restated By-laws of Kraft to add an exclusive forum provision.

On March 24, 2015, following the Kraft board call, Kraft, Heinz, merger sub I and merger sub II executed the merger agreement.

On March 25, 2015, before the opening of trading on NASDAQ, Kraft and Heinz issued a joint press release announcing the execution of the merger agreement.

Recommendation of the Kraft Board; Kraft’s Reasons for the Merger

At a meeting held on March 24, 2015, the Kraft board unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby.

In the course of reaching its recommendation, the Kraft board consulted with Kraft’s senior management and its financial advisor, Centerview, and outside legal counsel, Sullivan & Cromwell, and considered a number of factors, both positive and negative, and potential benefits and detriments of the merger to Kraft and its shareholders. The Kraft board believes that Kraft has made significant progress as a company since its separation from Mondelez International, Inc. in 2012, but that Kraft has not yet realized its full potential—and that a combination with Heinz offers a scaled, global platform to realize such full potential as part of the combined company.

 

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The decision of the Kraft board to enter into the merger agreement was the result of careful consideration by the Kraft board of numerous factors weighing positively in favor of the merger, including the following material factors:

 

    the Kraft board’s understanding of the respective businesses, operations, financial condition, earnings, strategy and prospects of Kraft and Heinz, including the report of Kraft’s management and Kraft’s advisors on the results of their due diligence review of Heinz and its assets, liabilities, earnings and financial condition, as well as Kraft’s and Heinz’s historical and projected financial performance;

 

    the fact that, since the merger consideration will consist of Heinz stock, Kraft shareholders will own approximately 49% of the combined company and have the opportunity to participate in the future earnings and expected growth of the combined company and any future appreciation in the value of the combined company’s common stock should they decide to retain the common stock payable in the merger;

 

    the synergies and other benefits to the combined company that could result from the merger, including an enhanced competitive and financial position, increased diversity and depth in its product line and geographic areas (providing for significant international growth opportunities) and the potential to realize, according to Heinz management, an estimated $1.5 billion in annual cost savings from the increased scale of the new organization, the sharing of best practices and cost reductions by the end of 2017;

 

    the investing and operating track record of Berkshire Hathaway and 3G Capital, including 3G Capital’s strong track record in achieving significant cost reduction and margin improvement in companies under its management;

 

    the risk, based on prior experience at Kraft and in the consumer product goods industry generally, that Kraft may not be able to achieve the significant cost savings contained in the Upside Case of the 2015 Financial Plan on a standalone basis;

 

    the fact that the special dividend of $16.50 per share which will be paid in cash to shareholders of record immediately prior to the closing represents 27% of Kraft’s closing price as of March 24, 2015 (the last trading date prior to announcement of the merger), giving Kraft shareholders an opportunity to realize value at closing for a portion of their investment in Kraft common stock;

 

    the negotiations that took place between the parties resulting in an increase from Heinz’s initial expression of interest on February 8, 2015, pursuant to which Kraft shareholders would own 47% of the combined company and receive a special dividend of $12.50 in cash per share, to Heinz’s “best and final” offer that was accepted by Kraft and pursuant to which Kraft shareholders would own 49% of the combined company and receive a special dividend of $16.50 in cash per share;

 

    the opinion of Centerview rendered to the Kraft board on March 24, 2015, which was subsequently confirmed by delivery of a written opinion dated such date, to the effect that, as of such date and based upon and subject to the various assumptions made, procedures followed, matters considered, and qualifications and limitations set forth in Centerview’s written opinion, the merger consideration and special dividend (taken together and not separately) to be paid to the holders of Kraft common stock (other than holders of deferred and restricted shares and stock held by Heinz or its affiliates) was fair, from a financial point of view, to such holders, as more fully described in the section of this proxy statement/prospectus entitled “—Opinion of Kraft’s Financial Advisor”;

 

    that under the merger agreement, Kraft is permitted to declare and pay regular quarterly dividends on its common stock, including increases consistent with past practice;

 

    the expectation by Kraft and Heinz management that the merger will not increase the debt levels of the combined company and that the combined company is expected to have an investment grade credit rating;

 

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    the post-closing governance structure of the combined company, including the following provisions of the merger agreement:

 

    John Cahill, the current Chairman of the Kraft board, will be the Vice Chairman of the combined company’s board of directors;

 

    the combined company’s board of directors will have five directors who are currently members of the Kraft board and three directors selected by each of 3G Capital and Berkshire Hathaway, including Warren Buffett, Chairman and CEO of Berkshire Hathaway, and Alexandre Behring (who will serve as Chairman of the board), Jorge Paulo Lemann and Marcel Telles, three of the founding partners of 3G Capital;

 

    the combined company will have co-corporate headquarters, one in the Chicago metropolitan area and one in Pittsburgh; and

 

    the combined company will be named The Kraft Heinz Company;

 

    the Kraft board’s view of the capability and likelihood for other potential counterparties to emerge, and that while the merger agreement contains a covenant prohibiting Kraft from soliciting third party acquisition proposals, it permits the Kraft board to change or withdraw its recommendation in favor of the merger agreement in connection with a superior proposal or for any other reason, or to discuss, negotiate and enter into an agreement with a third party providing for a superior proposal, in each case if the Kraft board determines in good faith, after consultation with its legal and financial advisors, that the failure to do so would be reasonably likely to be inconsistent with the Board’s fiduciary duties under applicable law, in the case of entry into an agreement for a superior proposal and certain changes of recommendation, subject to the payment by Kraft of a termination fee of $1.2 billion;

 

    the Kraft board’s determination, based on discussions with its financial advisor and outside legal counsel, that the payment by Kraft in certain circumstances of a $1.2 billion termination fee (or the obligation to reimburse Heinz’s expenses in certain circumstances, up to cap of $15 million, which is credited against the termination fee if the termination fee is later payable), is reasonable and customary in size in transactions similar to the merger;

 

    the ability of Kraft and Heinz to complete the merger in a timely manner, including the lack of any financing conditionality in the merger agreement, Kraft’s ability to specifically enforce Heinz’s obligations under the merger agreement, including to cause Heinz to enforce its equity investment commitments from 3G Capital and Berkshire Hathaway, and the strong contractual commitments of both parties with respect to the regulatory approvals required to complete the merger;

 

    the fact that the merger and the subsequent mergers of Kraft with merger sub I and subsequently merger sub II are intended to be treated as a single integrated transaction that is expected to qualify as a “reorganization” within the meaning of the Code and that the Kraft shareholders’ receipt of stock of the combined company in the merger is not expected to be taxable to them;

 

    the fact that the merger is subject to the approval of Kraft shareholders;

 

    the other material terms and conditions of the merger agreement, including, among other things, the representations, warranties and covenants of the parties, the conditions to closing of the merger and the parties’ termination rights; and

 

    the strategic review undertaken by the Kraft board and management and their view of the current and prospective competitive climate of the food and beverages industry in which Kraft and Heinz operate, including increasing competition, potential consolidation of other industry participants and the impact of such factors on the strategic alternatives reasonably available to Kraft if it did not pursue the merger.

In the course of its deliberations, the Kraft board also identified and considered a variety of risks and countervailing factors weighing negatively against the merger, including the following:

 

    the risk that the significant synergies and other benefits expected to result from the transaction may not be fully realized;

 

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    the risk that governmental entities may impose conditions on Kraft and Heinz that may adversely impact the ability of the combined company to realize the expected synergies and other benefits to the combined company;

 

    the challenges inherent in combining the businesses, operations and workforces of Kraft and Heinz, including the potential for unforeseen difficulties in integrating operations and systems and the possible distraction of management attention for an extended period of time;

 

    the possible disruption to Kraft’s business that may result from the announcement of the transaction and the risk that, despite the efforts of Kraft prior to the consummation of the merger, Kraft and Heinz may not be able to retain key personnel during the transition and/or following the merger;

 

    the potential for management focus and resources being diverted from operational matters and other strategic opportunities prior to closing and abiding by the terms of the merger agreement restricting the operation of Kraft’s business during the period between the signing of the merger agreement and the completion of the merger, which could lead to the loss of business opportunities for Kraft;

 

    the risk that Heinz’s financial profile could change between the date of the merger agreement and the completion of the merger, which could impact the value of the combined company’s common stock that Kraft shareholders will receive as consideration;

 

    the risk that the termination fee of $1.2 billion to be paid to Heinz if the merger agreement is terminated under circumstances specified in the merger agreement may discourage other parties that may otherwise have an interest in a business combination with Kraft (see the section of this proxy statement/prospectus entitled “The Merger Agreement—Description of the Merger Agreement—Expenses and Termination Fees; Liability for Breach”);

 

    the terms of the merger agreement that place limitations on the ability of Kraft to solicit, initiate, knowingly encourage or facilitate any inquiry, discussion, offer or request that would reasonably be expected to result in proposals for alternative business combination transactions and to furnish non-public information to, or engage in discussions or negotiations with, a third party interested in pursuing an alternative business combination transaction (see the section of this proxy statement/prospectus entitled “The Merger Agreement—Description of the Merger Agreement—No Solicitation of Takeover Proposals”);

 

    the substantial costs to be incurred in connection with the transaction, including the costs of integrating the businesses of Kraft and Heinz and the transaction expenses arising from the merger;

 

    the risk that Kraft’s shareholders may vote against approval of the merger agreement; and

 

    the risks of the type and nature described in the section of this proxy statement/prospectus entitled “Risk Factors.”

The Kraft board also considered the interests that the executive officers and directors of Kraft have with respect to the merger in addition to their interests as shareholders of Kraft generally (see the section of this proxy statement/prospectus entitled “Financial Interests of Kraft’s Directors and Executive Officers in the Merger”).

Although the foregoing discussion sets forth the material factors considered by the Kraft board in reaching its recommendation, it is not intended to be exhaustive and may not include all of the factors considered by the Kraft board, and each director may have considered different factors or given different weight to each factor. The above factors are not presented in any order of priority. In view of the variety of factors, the amount of information and the complexity of the matters considered, the Kraft board did not find it practicable to, and did not, make specific assessments of, or assign relative weights to, the specific factors considered in reaching its recommendation. The explanation of the reasoning of the Kraft board and certain information presented in this section are forward-looking in nature and should be read in light of the factors discussed in the section of this proxy statement/prospectus entitled “Cautionary Statement Regarding Forward-Looking Statements.”

 

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After careful consideration, the Kraft board unanimously (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated thereby. Accordingly, the Kraft board unanimously recommends that the Kraft shareholders vote (i) “FOR” approval of the merger agreement and (ii) “FOR” all other proposals described in this proxy statement/prospectus submitted for shareholder approval in connection with the merger agreement.

Opinion of Kraft’s Financial Advisor

On March 24, 2015, Centerview rendered to the Kraft board its oral opinion, subsequently confirmed in a written opinion dated as of such date, to the effect that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered and qualifications and limitations set forth in Centerview’s written opinion, the Consideration to be paid to the holders of the Kraft common stock (other than Excluded Shares) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated March 24, 2015, which describes the various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex B to this proxy statement/prospectus and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety by the full text of Centerview’s written opinion attached as Annex B to this proxy statement/prospectus. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Kraft board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transaction, and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the holders of the Kraft common stock (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the Transaction and does not constitute a recommendation to any shareholder of Kraft or any other person as to how such shareholder or other person should vote with respect to the merger or otherwise act with respect to the Transaction or any other matter.

The full text of Centerview’s written opinion should be read carefully in its entirety. Below is a description of the various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

    the merger agreement;

 

    Annual Reports on Form 10-K of Kraft for the fiscal years ended December 27, 2014, December 28, 2013 and December 29, 2012 and the Annual Report on Form 10-K of H. J. Heinz Corporation II for the fiscal year ended December 28, 2014;

 

    certain interim reports to shareholders and Quarterly Reports on Form 10-Q of Kraft and H. J. Heinz Corporation II;

 

    certain publicly available research analyst reports for Kraft;

 

    certain other communications from Kraft to its shareholders;

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Kraft, including certain financial forecasts, analyses and projections relating to Kraft prepared by management of Kraft and furnished to Centerview by Kraft for purposes of Centerview’s analysis (which are referred to in this summary of Centerview’s opinion as the Kraft Forecasts (the

 

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Kraft Forecasts are summarized in this proxy statement/prospectus under the section entitled “Certain Forecasts”) and which information we collectively refer to in this summary of Centerview’s opinion as the Kraft Internal Data);

 

    certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Heinz (which we refer to collectively in this summary of Centerview’s opinion as the Heinz Internal Data);

 

    certain financial information relating to Heinz prepared by management of Heinz, which was furnished to Centerview by Kraft and was adjusted, at Kraft’s direction and for purposes of Centerview’s analysis, by Centerview and Bain (which, as so adjusted, we refer to in this summary of Centerview’s opinion as the Adjusted Heinz Forecasts); and

 

    certain cost savings and operating synergies projected by the management of Heinz to result from the Transaction, which was furnished to Centerview by Kraft and was adjusted, at Kraft’s direction and for purposes of Centerview’s analysis, by Bain to take into account that a meaningful amount attributable to the cost savings and operating synergy elements projected by the management of Heinz to result from the transaction were also included in the Kraft Forecasts and in the other Kraft Internal Data (which, as so adjusted, we refer to in this summary of Centerview’s opinion as the Synergies).

Centerview also conducted discussions with members of the senior management and representatives of Kraft and Heinz regarding their assessment of Kraft Internal Data, the Heinz Internal Data, the Adjusted Heinz Forecasts and the Synergies, as appropriate, and the strategic rationale for the Transaction. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant and compared that data with relevant data for Kraft and Heinz. Centerview also compared certain of the proposed financial terms of the Transaction with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with Kraft’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at Kraft’s direction, that the Kraft Internal Data (including, without limitation, the Kraft Forecasts), the Adjusted Heinz Forecasts and the Synergies were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Kraft as to the matters covered thereby, and that the Heinz Internal Data was reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Heinz as to the matters covered thereby, and Centerview relied, at Kraft’s direction, on the Kraft Internal Data (including, without limitation, the Kraft Forecasts), the Heinz Internal Data, the Adjusted Heinz Forecasts and the Synergies for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to the Kraft Internal Data, the Heinz Internal Data, the Adjusted Heinz Forecasts or the Synergies or the assumptions on which any of them were based. In addition, at Kraft’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Kraft or Heinz, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Kraft or Heinz. Centerview also assumed, at Kraft’s direction, that the Transaction will be consummated on the terms set forth in the merger agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the Transaction, no delay, limitation, restriction, condition or other change including any divestiture requirements or amendments or modifications, will be imposed, the effect of which would be material to Centerview’s analysis or opinion. Centerview further assumed, at Kraft’s direction, that (i) the merger and the subsequent merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of the Code, (ii) Heinz and Kraft will each

 

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be a party to the reorganization within the meaning of Section 368(b) of the Code and (iii) the merger agreement is adopted as a “plan of reorganization” for purposes of Sections 354 and 361 of the Code. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Kraft or Heinz, or the ability of Kraft or Heinz to pay their respective obligations when they come due, or as to the impact of the Transaction on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, Kraft’s underlying business decision to proceed with or effect the Transaction, or the relative merits of the Transaction as compared to any alternative business strategies or transactions that might be available to Kraft or in which Kraft might engage. Centerview did not undertake a third-party solicitation process on Kraft’s behalf regarding a potential transaction with Kraft. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the Kraft common stock (other than Excluded Shares) of the Consideration to be paid to such holders pursuant to the merger agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the Transaction, including, without limitation, the structure or form of the Transaction, or any other agreements or arrangements contemplated by the merger agreement or entered into in connection with or otherwise contemplated by the Transaction, including, without limitation, the fairness of the Transaction or any other term or aspect of the Transaction to, or any consideration to be received in connection therewith by, or the impact of the Transaction on, the holders of any other class of securities, creditors or other constituencies of Kraft or any other party. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Kraft or any party, or class of such persons in connection with the Transaction, whether relative to the Consideration to be paid to holders of the Kraft common stock pursuant to the merger agreement or otherwise. Centerview’s opinion, as expressed therein, related, in part, to the relative values of Kraft and Heinz. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview expressed no view or opinion as to what the value of the shares of Kraft Heinz common stock will actually be when issued pursuant to the Transaction or the prices at which the shares of Kraft common stock or the shares of Kraft Heinz common stock will trade or otherwise be transferable at any time, including following the announcement or consummation of the Transaction. Centerview’s opinion does not constitute a recommendation to any shareholder of Kraft or any other person as to how such shareholder or other person should vote with respect to the merger or otherwise act with respect to the Transaction or any other matter. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Kraft board (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the Transaction. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Kraft board in connection with Centerview’s opinion, dated March 24, 2015. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Kraft or Heinz, or the relative value of Kraft and Heinz. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the

 

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tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Kraft or any other parties to the Transaction. None of Kraft, Heinz, merger sub I, merger sub II, 3G Capital, Berkshire Hathaway or Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Kraft or Heinz do not purport to be appraisals or reflect the prices at which Kraft or Heinz may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before March 23, 2015 (the trading day prior to the Kraft board meeting at which Kraft’s directors voted to approve the merger) and is not necessarily indicative of current market conditions. The implied per share equity value ranges for Kraft common stock described below were based on Kraft’s fully diluted outstanding shares calculated on a treasury stock method basis (taking into account in-the-money options, warrants and other convertible securities) based on information provided by Kraft management.

Relative Valuation Analysis

Centerview performed a relative valuation analysis of the implied equity value of Kraft (after giving effect to the special dividend) to the implied common equity value of Heinz (after giving effect to the equity investment) based on the following valuation methodologies.

Selected Trading Multiples Analysis—Kraft

Centerview reviewed and compared certain financial information, ratios and multiples for Kraft to corresponding financial information, ratios and multiples for the following publicly traded companies in the food and beverage industry that Centerview, based on its experience and professional judgment, deemed comparable for purposes of its analysis (which we refer to as the selected companies):

 

Mega-Cap Companies

  

North American Packaged
Food Companies

   Focused Scale Companies

•    Nestlé S.A.

 

•    PepsiCo, Inc.

 

•    Unilever PLC

 

•    Mondelēz International, Inc.

 

•    Groupe Danone S.A.

  

•    Kraft Foods Group, Inc.

 

•    General Mills, Inc

 

•    The Kellogg Company

 

•    ConAgra Foods, Inc.

 

•    Campbell Soup Company

   •    Hormel Foods Corporation

 

•    The J. M. Smucker
Company

 

•    McCormick & Company

Although none of the other selected companies is directly comparable to Kraft and/or Heinz, Centerview chose the selected companies because they are publicly traded companies with certain operational and financial characteristics (including, but not limited to, the size, business lines and geographic footprint of the respective companies), which, for purposes of its analyses, Centerview considered to be similar to those of Kraft and/or Heinz.

In performing this analysis, Centerview utilized information it obtained from SEC filings, FactSet (a data source containing historical and estimated financial data), I/B/E/S (Institutional Brokers’ Estimate System),

 

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closing stock prices on March 23, 2015, and the Kraft Forecasts summarized in this proxy statement/prospectus under the section entitled “Certain Forecasts”. With respect to each of the selected companies, Centerview calculated the following ratios and multiples: enterprise value (calculated as the equity value (taking into account in-the-money options and other equity awards and convertible securities) plus the book value of debt and preferred equity, less cash and cash equivalents and short-term investments, plus estimated value of minority interests, less estimated value of equity investments) as a multiple of 2015 calendar year estimated earnings before interest, taxes, depreciation and amortization, or EBITDA; and the ratio of closing stock price on March 23, 2015 to 2015 calendar year estimated earnings per share, or EPS (a ratio commonly referred to as a price to earnings ratio, or P/E). In performing these calculations, Centerview excluded certain one-time expenses and non-recurring charges and adjusted for certain announced transactions.

The results of this analysis are summarized below:

 

     Enterprise
Value /
EBITDA

CY 2015E
     P/E
CY 2015E
 

Overall Mean

     12.6x         20.1x   

Overall Median

     12.7x         20.6x   

Kraft

     12.7x         19.9x   

Based on its experience and professional judgment, for purposes of its analysis Centerview selected reference ranges of multiples of enterprise value to 2015 calendar year estimated EBITDA of 12.5x to 13.0x and ratios of closing stock price on March 23, 2015 to 2015 calendar year estimated EPS of 20.0x to 21.0x. In selecting these reference ranges, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Kraft and the selected companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. Using these reference ranges and the Kraft Forecasts, Centerview calculated the following implied ranges of equity values for Kraft (after giving effect to the special dividend): based on Kraft’s 2015 calendar year estimated operating EBITDA of approximately $3.601 billion, as set forth in the Financial Forecasts, Centerview calculated an implied range of equity values for Kraft of approximately $26.4 to $28.2 billion (which Centerview noted implied a range of approximately $60.75 to $63.75 per share of Kraft common stock, including the special dividend) and based on Kraft’s 2015 calendar year estimated operating EPS of $3.12, Centerview calculated an implied range of equity values for Kraft of approximately $27.4 to $29.3 billion (which Centerview noted implied a range of approximately $62.50 to $65.50 per share of Kraft common stock, including the special dividend).

 

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Selected Transaction Multiples Analysis—Kraft

Centerview analyzed certain information relating to selected large-scale transactions since 2000 in the food and beverages industry that Centerview, based on its experience and professional judgment, deemed relevant for purposes of its analysis. These transactions, which we refer to as the selected transactions, were as follows:

 

Date Announced

  

Target

  

Acquiror

May 2014

   The Hillshire Brands Company    Tyson Foods, Inc.

February 2013

   H. J. Heinz Company    3G Capital and Berkshire Hathaway

November 2012

   Ralcorp Holdings, Inc.    ConAgra Foods, Inc

November 2010

   Del Monte Foods    Funds affiliated with Kohlberg Kravis Roberts & Co. L.P., Vestar Capital Partners and Centerview Capital, L.P.

January 2010

   Cadbury plc    Kraft Foods Inc. (prior to Kraft’s separation from Mondelēz International, Inc.)

January 2010

   North American Frozen Pizza Business of Kraft Food Global, Inc.    Nestlé S.A.

July 2008

   Anheuser-Busch    InBev

April 2008

   Wm. Wrigley Jr. Company    Mars, Incorporated

July 2007

   Biscuits Division of Groupe Danone S.A.    Kraft Foods Inc. (prior to Kraft’s separation from Mondelēz International, Inc.)

January 2001

   Ralston Purina Company    Nestlé S.A.

December 2000

   IBP, Inc.    Tyson Foods Inc.

December 2000

   The Quaker Oats Company    PepsiCo, Inc.

October 2000

   Keebler Foods Company    Kellogg Company

July 2000

   The Pillsbury Company    General Mills, Inc

June 2000

   Nabisco Holdings Corp.    Philip Morris Companies Inc.

June 2000

   Bestfoods    Unilever plc

No company or transaction used in this analysis is identical or directly comparable to Kraft or Heinz or the Transaction. The companies included in the selected transactions are companies that were selected, among other reasons, because they have certain characteristics that, for the purposes of this analysis, Centerview considered to be similar to certain characteristics of Kraft. The reasons for and the circumstances surrounding each of the selected transactions analyzed were diverse, and there are inherent differences in the business, operations, financial conditions and prospects of Kraft, Heinz and the companies included in the selected transactions.

For each of the selected transactions, based on information it obtained from SEC filings, Wall Street research, S&P Capital IQ and ThomsonOne, Centerview calculated the ratios of enterprise value (based upon announced transaction value and including the target’s outstanding net debt) as a multiple of EBITDA for, where available, the most recently ended four quarters prior to announcement of the transaction, or LTM EBITDA. In performing these calculations, Centerview adjusted EBITDA for the target companies to exclude one-time expenses and non-recurring charges.

 

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The results of this analysis are summarized as follows:

 

     Enterprise Value
as a Multiple of
EBITDA
 

75th Percentile

     14.3x   

Mean

     13.1x   

Median

     13.1x   

25th Percentile

     11.7x   

Based on its professional judgment and experience, for purposes of its analysis Centerview selected a reference range of multiples of enterprise (transaction) value to 2015 calendar year estimated EBITDA of 13.0x to 15.0x. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Kraft and the companies included the selected transactions and other factors that could affect the public trading, acquisition or other values of such companies or Kraft. Using this reference range and Kraft’s 2015 calendar year estimated operating EBITDA of approximately $3.601 billion, as set forth in the Financial Forecasts, Centerview calculated a range of implied equity values for Kraft (after giving effect to the special dividend) of approximately $28.2 to $35.4 billion (which Centerview noted implied a range of approximately $63.75 to $75.50 per share of Kraft common stock, including the special dividend).

Discounted Cash Flows Analysis—Kraft

A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

Centerview performed two discounted cash flow analyses of Kraft, one using the 2015 Financial Plan reflected in the Kraft Forecasts and one using the Upside Case of the 2015 Financial Plan reflected in the Kraft Forecasts. In performing these analyses, Centerview calculated a range of the implied present values of the standalone, unlevered, after-tax free cash flows of Kraft reflected in the 2015 Financial Plan and reflected in the Upside Case of the 2015 Financial Plan, as applicable, for calendar years 2015 through 2019 using discount rates ranging from 6.75% to 7.25%, reflecting Centerview’s analysis of Kraft’s weighted average cost of capital, or WACC, using the mid-year convention. This range of discount rates was determined based on Centerview’s analysis of Kraft’s weighted average cost of capital, derived using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its experience and professional judgment, taking into account certain metrics including levered and unlevered beta, tax rates, the market risk and size premia and yields for U.S. treasury bonds. At the direction of Kraft management, and for purposes of Centerview’s analysis, Centerview extrapolated Kraft’s 2019 calendar year prospective financial data by holding revenue growth and other key assumptions constant from prospective financial data for 2018 prepared by Kraft management. Centerview also calculated a terminal value for Kraft using the standalone, unlevered, after tax free cash flow for calendar year 2019 reflected in the 2015 Financial Plan and reflected in the Upside Case of the 2015 Financial Plan, as applicable, and a perpetuity growth rate of 2.5%. The terminal value was then discounted to present value, using discount rates ranging between 6.75% to 7.25%. Centerview then added the range of implied present values of the standalone, unlevered, after-tax free cash flows for calendar years 2015 through 2019 to the present value of the terminal value to derive ranges of implied equity values for Kraft (after giving effect to the special dividend) of approximately $31.3 to $37.2 billion (which Centerview noted implied a range of approximately $69.00 to $78.75 per share of Kraft common stock, including the special dividend) utilizing the 2015 Financial Plan and approximately $34.1 to $40.2 billion (which Centerview noted implied a range of approximately $73.50 to $83.75 per share of Kraft common stock, including the special dividend) utilizing the Upside Case of the 2015 Financial Plan.

 

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Selected Trading Multiples Analysis—Heinz

Centerview reviewed and compared certain financial information, ratios and multiples for Heinz to the corresponding financial information, ratios and multiples of the selected companies as described above under the subtitle “Selected Trading Multiples Analysis—Kraft”.

Based on its experience and professional judgment, for purposes of its analysis Centerview selected reference ranges of multiples of enterprise value to 2015 estimated EBITDA and multiples of 2015 estimated net income. In selecting these reference ranges, Centerview made qualitative judgments, based on its experience and professional judgment, concerning differences between the business, financial and operating characteristics and prospects of Heinz and the selected companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. Using these reference ranges and the Adjusted Heinz Forecasts, Centerview calculated the following implied ranges of common equity values for Heinz (after giving effect to the equity investment): based on 2015 estimated EBITDA of approximately $3.073 billion, as set forth in the Adjusted Heinz Forecasts, Centerview calculated an implied range of common equity values for Heinz of approximately $30.7 to $33.8 billion and based on estimated adjusted 2015 net income of $1.335 billion (pro forma for the refinancing of preferred equity), Centerview calculated an implied range of common equity values for Heinz of approximately $36.7 to $38.0 billion.

Selected Transaction Multiples Analysis—Heinz

Centerview performed a transaction multiples analysis of Heinz by analyzing the selected transactions as described above under the subtitle “Selected Transaction Multiples Analysis—Kraft”.

Based on its experience and professional judgment, for purposes of its analysis Centerview selected a reference range of multiples of enterprise (transaction) value to 2015 estimated EBITDA. In selecting this reference range, Centerview made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Heinz and the companies included the selected transactions and other factors that could affect the public trading, acquisition or other values of such companies or Heinz. Using this reference range and the Heinz 2015 estimated EBITDA of $3.073 billion as set forth in the Adjusted Heinz Forecasts, Centerview calculated a range of implied common equity values for Heinz (after giving effect to the equity investment) of approximately $30.7 to $36.9 billion.

Discounted Cash Flow Analysis—Heinz

Centerview performed a discounted cash flow analysis of Heinz based on the Adjusted Heinz Forecasts. In performing this analysis, Centerview calculated a range of the implied present values of the standalone, unlevered, after-tax free cash flows of Heinz reflected in the Adjusted Heinz Forecasts for 2015 through 2019 using discount rates ranging from 6.75% to 7.25%, reflecting Centerview’s analysis of Heinz’s WACC, using the mid-year convention. This range of discount rates was determined based on Centerview’s analysis of Heinz’s weighted average cost of capital, derived using the Capital Asset Pricing Model and based on considerations that Centerview deemed relevant in its experience and professional judgment, taking into account certain metrics including levered and unlevered beta, tax rates, the market risk and size premia and yields for U.S. treasury bonds. Centerview also calculated a terminal value for Heinz using the standalone, unlevered, after tax free cash flow for 2019 reflected in the Adjusted Heinz Forecasts and a perpetuity growth rate of 2.5%. The terminal value was then discounted to present value using discount rates ranging between 6.75% to 7.25%. Centerview then added the range of implied present values of the standalone, unlevered, after-tax free cash flows for 2015 through 2019 to the present value of the terminal value to derive a range of implied common equity values for Heinz (after giving effect to the equity investment) of approximately $38.3 to $44.0 billion.

 

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Relative Value Analysis

Centerview then calculated ranges of the implied relative ownership of the Kraft shareholders in the combined company after giving effect to the Transaction under each of the above valuation analyses, without giving effect to any Synergies, by calculating the low point of the range for each such analysis by dividing the low implied equity value of Kraft from such analysis by the sum of such low implied equity value of Kraft and the high implied common equity value of Heinz from the corresponding analysis and calculating the high point of the range for each such analysis by dividing the high implied equity value of Kraft from such analysis by the sum of such high implied equity value of Kraft and the low implied common equity value of Heinz from the corresponding analysis. In addition, for each of the above valuation analyses Centerview calculated a range of implied exchange ratios based on the number of shares of outstanding Kraft common stock as of March 19, 2015 and the number of shares of outstanding Heinz common stock as of March 19, 2015 (adjusted by the pre-closing Heinz share conversion). The following table sets forth the ranges of implied relative ownership and implied exchange ratios calculated by Centerview in this analysis:

 

Valuation Methodology

   Range of Implied
Ownership of the
Combined Company by
Former Kraft
Shareholders
  Range of Implied
Exchange Ratios

Trading Multiples Analysis

  

Enterprise Value / 2015 Estimated EBITDA

  

43.9% – 47.9%

 

0.813x – 0.956x

   Stock Price / 2015 Estimated EPS    41.9% – 44.4%   0.751x – 0.832x

Transaction Multiples Analysis

  

Enterprise Value / 2015 Estimated EBITDA

  

43.3% – 53.5%

 

0.796x – 1.200x

Discounted Cash Flow Analysis

  

2015 Financial Plan

  

41.6% – 49.3%

 

0.742x – 1.011x

   Upside Case of the 2015 Financial Plan    43.7% – 51.2%   0.807x – 1.094x

Centerview compared the above ranges of implied relative ownership to 49%, the relative ownership of the combined company that the former Kraft shareholders would have after giving effect to the merger as contemplated by the Merger Agreement. Centerview also compared the above ranges of implied exchange ratios to 1.000x, the exchange ratio for the merger.

Centerview also performed the relative value analysis giving effect to net cost Synergies. For purposes of this analysis, Centerview calculated the ranges of implied relative ownership of the Kraft shareholders of the combined company by allocating a low of 50% and a high of 65% of these Synergies to Kraft. The following table sets forth the ranges of implied relative ownership and implied exchange ratios calculated by Centerview in this analysis:

 

Valuation Methodology

   Range of Implied
Ownership of the
Combined Company by
Former Kraft
Shareholders
  Range of Implied
Exchange Ratios

Trading Multiples Analysis

  

Enterprise Value / 2015 Estimated EBITDA

  

45.0% – 51.1%

 

0.852x – 1.089x

   Stock Price / 2015 Estimated EPS    43.3% – 48.0%   0.796x – 0.961x

Transaction Multiples Analysis

  

Enterprise Value / 2015 Estimated EBITDA

  

44.5% – 55.5%

 

0.835x – 1.300x

Discounted Cash Flow Analysis

  

2015 Financial Plan

  

42.9% – 51.7%

 

0.783x – 1.115x

   Upside Case of the 2015 Financial Plan    44.6% – 53.3%   0.838x – 1.188x

 

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Centerview compared the above ranges of implied relative ownership to 49%, the approximate ownership of the combined company that the Kraft shareholders would have after giving effect to the Transaction. Centerview also compared the above ranges of implied exchange ratios to 1.000x, the exchange ratio for the merger.

Centerview noted for the Kraft board certain additional factors solely for informational purposes, including, among other things, the following:

 

    Historical Stock Trading Analysis. Centerview reviewed the historical trading prices for Kraft common stock since the completion of Kraft’s separation from Mondelēz International, Inc. in October 2012. Centerview noted that the 52-week trading range (intraday trading high and low) implied an equity value range for Kraft (after giving effect to the special dividend) of approximately $21.9 to $30.7 billion (which Centerview noted implied a range of approximately $53.33 to $67.74 per share of Kraft common stock, including the special dividend), but also noted that historical trading range analysis is not a valuation methodology and that such analysis was presented for reference purposes only and not as a component of its fairness analyses.

 

    Analyst Price Targets. Centerview reviewed stock price targets for Kraft common stock, based on information it obtained from publicly available Wall Street research analyst reports and FactSet. Centerview noted that the analyst price targets reflected an equity value range for Kraft (after giving effect to the special dividend) of approximately $23.6 to $33.9 billion (which Centerview noted implied a range of approximately $56.00 to $73.00 per share of Kraft common stock, including the special dividend), but also noted that analyst price targets are not a valuation methodology and that such analysis was presented for reference purposes only and not as a component of its fairness analyses.

 

    Illustrative Present Value of the Transaction. Centerview analyzed the illustrative present value of the Transaction based on a number of valuation methodologies and assumptions, and based on Centerview’s experience and professional judgment. Based on this analysis, Centerview calculated an implied range of equity values for Kraft (after giving effect to the special dividend) of approximately $32.8 to $43.3 billion (which Centerview noted implied a range of approximately $71.25 to $88.50 per share of Kraft common stock, including the special dividend).

 

    Contribution Analysis. Centerview performed a contribution analysis of Kraft and Heinz in which Centerview reviewed the relative contributions of Kraft and Heinz to the estimated EBITDA, earnings before interest and taxes, or EBIT, and net income of the combined company for 2015 and 2016, both excluding and including any Synergies. In performing this analysis, at the direction of Kraft’s management, Centerview utilized the Upside Case of the 2015 Financial Plan for 2015, the Upside Case of the 2015 Financial Plan for 2016, and the Adjusted Heinz Forecasts, adjusted to reflect the pro forma refinancing of Heinz’s preferred equity. The implied relative contribution percentages calculated by Centerview in performing this analysis for Kraft, excluding synergies, ranged from 54.0% to 58.9%.

Centerview then performed a contribution analysis of Kraft and Heinz on the same basis as described above but giving effect to the Synergies. The implied relative contribution percentages calculated by Centerview in performing this analysis for Kraft ranged from 50.9% (before a synergy contribution of 5.8%) to 54.9% (before a synergy contribution of 6.9%).

Centerview compared the implied percentages based on EBITDA and EBIT to 55%, which represented the contribution of Kraft to the combined company’s enterprise value. In addition, Centerview compared the implied percentages based on net income to 67%, which represented the implied ownership of the Kraft shareholders in the combined company’s equity value without giving effect to the equity investment or the special dividend.

 

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General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Kraft board in its evaluation of the Transaction. Consequently, the analyses described above should not be viewed as determinative of the views of the Kraft board or management with respect to the Consideration or as to whether the Kraft board would have been willing to determine that a different consideration was fair. The consideration for the Transaction was determined through arm’s-length negotiations between Kraft and Heinz and was approved by the Kraft board. Centerview provided advice to Kraft during these negotiations. Centerview did not, however recommend any specific amount of consideration to Kraft or the Kraft board or that any specific amount of consideration constituted the only appropriate consideration for the transaction.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. Over the past two years, Centerview has from time to time assisted the Kraft board and Kraft senior management in evaluating Kraft’s long-term strategy and financial outlook. Centerview has not received any compensation for such services because no transactions were executed in connection therewith. In the past two years, Centerview has not provided any financial advisory or other services to Heinz, merger sub I, merger sub II, 3G Capital, or Berkshire Hathaway (3G Capital and Berkshire Hathaway are each affiliates of Heinz), for which Centerview has received any compensation, except that in 2013 Centerview acted as financial advisor to H. J. Heinz Company in connection with its sale to an investment consortium comprised of Berkshire Hathaway and an investment fund affiliated with 3G Capital, and Centerview received compensation of approximately $36 million for such services. In addition, in the ordinary course of Centerview’s business, Centerview may have provided, and may be providing, financial advisory or other services to companies in which 3G Capital or its affiliates, or Berkshire Hathaway or its affiliates, have a non-controlling investment. Centerview may provide financial advisory and other services to or with respect to Kraft, Heinz, 3G Capital, Berkshire Hathaway or their respective affiliates (including portfolio companies of 3G Capital and Berkshire Hathaway) in the future, for which Centerview may receive compensation. Certain entities affiliated with 3G Capital are limited partners in Centerview Capital, L.P., which we refer to as Centerview Capital, an investment fund separate from Centerview is focused on the consumer sector. Certain partners of Centerview are also partners in the ultimate general partner and the manager of Centerview Capital, and serve on Centerview Capital’s investment committee. Certain (i) of Centerview and Centerview’s affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Kraft, Heinz, 3G Capital, Berkshire Hathaway or any of their respective affiliates (including portfolio companies and affiliated funds of 3G Capital and portfolio companies of Berkshire Hathaway), or any other party that may be involved in the Transaction.

The Kraft board selected Centerview as its financial advisor in connection with the Transaction based on Centerview’s reputation and experience. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Transaction.

In connection with Centerview’s services as the financial advisor to the Kraft board, Kraft has agreed to pay Centerview an aggregate fee expected to be approximately $60 million, $10 million of which was payable upon the rendering of Centerview’s opinion and the balance of which is payable contingent upon consummation of the

 

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Transaction. In addition, Kraft has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Certain Forecasts

Neither Kraft nor Heinz publicly discloses forecasts or projections as to future revenues, earnings or other results due to, among other reasons, the uncertainty and subjectivity of the underlying assumptions and estimates. As a result, neither Kraft nor Heinz endorses the unaudited prospective financial information set forth below as a reliable indication of future results. The limited unaudited prospective financial information set forth below is included in this document solely because it was among the financial information made available to the Kraft board and Centerview in connection with their evaluation of the merger. Certain financial information, including the Financial Forecasts (but excluding the Adjusted Heinz Forecasts), was also made available to Heinz’s management and its advisors on a confidential basis in connection with its evaluation of the signing of the merger agreement.

The Financial Forecasts represent Kraft’s internally prepared unaudited prospective financial information and were based on estimates and assumptions made by management in the first quarter of 2015 and speak only as of that time. The Adjusted Heinz Forecasts represent Heinz’s internally prepared unaudited prospective financial information as subsequently adjusted, at Kraft’s direction and for purposes of Centerview’s analysis, by Centerview and Bain. The Adjusted Heinz Forecasts were based on estimates and assumptions made by Heinz and Kraft management and Centerview in the first quarter of 2015 and speak only as of that time.

The Financial Forecasts and the Adjusted Heinz Forecasts were based on internal management reporting that may differ from Kraft’s and Heinz’s external public reporting, respectively. Except to the extent required by applicable law, neither Kraft nor Heinz has any obligation to update the Financial Forecasts or the Adjusted Heinz Forecasts included in this proxy statement/prospectus.

The inclusion of the Financial Forecasts and the Adjusted Heinz Forecasts set forth below should not be regarded as an indication that any of Kraft, Centerview, Heinz or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results. There can be no assurance that the prospective results will be realized or that actual results will not be significantly higher or lower than estimated. Additionally, the Financial Forecasts and Adjusted Heinz Forecasts set forth below contemplate standalone financial projections for each of the respective businesses, which include the realization of productivity and cost savings initiatives. The Financial Forecasts were developed separately from the process in which Heinz developed its estimate of annual run-rate cost savings for the combined company following the merger. A meaningful amount of the productivity and cost savings initiatives included in the financial projections are also reflected in the publicly disclosed estimated annual run-rate cost savings for the combined company in connection with the merger. Readers of this document are cautioned not to place undue reliance on the unaudited prospective financial information set forth below.

 

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The following table presents the Financial Forecasts.

 

     Fiscal Year Ended December 31,  
($ in millions)    2015E     2016E     2017E     2018E  

The 2015 Financial Plan

        

Net Revenue

   $ 17,962      $ 18,051      $ 18,412      $ 18,781   

Organic Growth(1)

     0.0     0.5     2.0     2.0

Operating EBITDA

   $ 3,601      $ 3,718      $ 3,963      $ 4,218   

Operating Earnings Per Share

   $ 3.12      $ 3.28      $ 3.51      $ 3.79   

The Upside Case of the 2015 Financial Plan

        

Net Revenue

   $ 17,962      $ 18,051      $ 18,412      $ 18,781   

Organic Growth(1)

     0.0     0.5     2.0     2.0

Operating EBITDA

   $ 3,601      $ 3,850      $ 4,155      $ 4,416   

Operating Earnings Per Share

   $ 3.12      $ 3.43      $ 3.73      $ 4.02   

 

(1) Growth rate reflects constant currency basis.

For purposes of the Financial Forecasts provided to the Kraft board, Centerview, Bain and Heinz and presented herein, “operating EBITDA” is calculated as earnings before interest and taxes, excluding the impacts of cost savings initiatives, market-based impacts to postemployment benefit plans and unrealized gains/losses on hedging activities, plus depreciation and amortization expenses, and “operating earnings per share” is calculated as earnings per share excluding the impacts of cost savings initiatives, market-based impacts to postemployment benefit plans and unrealized gains/losses on hedging activities.

The following table presents the Adjusted Heinz Forecasts.

 

     Fiscal Year Ended December 31,  
($ in millions)    2015E      2016E      2017E      2018E  

Net Revenue(1)

   $ 10,342       $ 10,336       $ 10,471       $ 10,735   

Operating EBITDA(1)

   $ 3,073       $ 3,233       $ 3,395       $ 3,575   

Adjusted Net Income(2)

   $ 1,543       $ 1,491       $ 1,508       $ 1,647   

 

(1) Reflects certain downward adjustments to Heinz’s internal forecasts made at Kraft’s direction. These adjustments were not material to the projected financial performance of Heinz (the adjustments did not reduce projected Revenue or Operating EBITDA, as applicable, by more than 3.5% in any year).
(2) Reflects adjusted net income attributable to the company assuming that the Series A Preferred Stock is redeemed in June 2016 with proceeds of new indebtedness.

For purposes of the Adjusted Heinz Forecasts provided to the Kraft board and Centerview and presented herein, “operating EBITDA” is calculated as earnings from continuing operations before interest, taxes, depreciation and amortization, other operating (income) expenses, net, and certain other costs associated with projects, transaction costs, restructuring and related professional fees and “adjusted net income” is calculated as net income adjusted for certain one-time, non-recurring expenses, and excluding preferred dividends.

Although presented with numerical specificity above, the Financial Forecasts and the Adjusted Heinz Forecasts reflect numerous assumptions and estimates as to future events made by the management of Kraft and Heinz, as applicable. At the time the Financial Forecasts and the Adjusted Heinz Forecasts were prepared, Kraft and Heinz management, as applicable, believed such assumptions and estimates were reasonable. In preparing

 

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the Financial Forecasts and the Adjusted Heinz Forecasts, assumptions were made regarding, among other things, sales volumes, cost savings, interest rates, corporate financing activities, the effective tax rate and the amount of income taxes, annual dividends and share repurchase levels.

No assurances can be given that the assumptions made in preparing the Financial Forecasts and the Adjusted Heinz Forecasts will accurately reflect future conditions. The estimates and assumptions underlying the Financial Forecasts and the Adjusted Heinz Forecasts involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions which may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among others, risks and uncertainties described under “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements,” beginning on pages [], and [], respectively, all of which are difficult to predict and many of which are beyond the control of Kraft and Heinz and will be beyond the control of the combined company following completion of the merger. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized. Actual results likely will differ, and may differ materially, from those reflected in the unaudited prospective financial information, whether or not the merger is completed.

NEITHER KRAFT NOR HEINZ INTENDS TO UPDATE OR OTHERWISE REVISE THE FINANCIAL FORECASTS OR THE ADJUSTED HEINZ FORECASTS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY LAW.

Since the Financial Forecasts and the Adjusted Heinz Forecasts cover multiple years, the unaudited prospective financial information contained in such forecasts, by its nature, becomes less predictive with each successive year. The unaudited prospective financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. As and to the extent described above, the unaudited prospective financial information included in this proxy statement/prospectus has been prepared by, and is the responsibility of, Kraft and Heinz management. PricewaterhouseCoopers LLP has neither examined, compiled nor performed any procedures with respect to the accompanying unaudited prospective financial information and, accordingly, does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP reports relating to Kraft’s financial statements contained in the Annual Report of Kraft on Form 10-K for the year ended December 27, 2014, which is incorporated by reference into this document, and relating to the financial statements of Heinz included in this proxy statement / prospectus, relate to the historical financial information of Kraft and Heinz, respectively. Neither report extends to the Financial Forecasts or the Adjusted Heinz Forecasts and neither should be read to do so. Furthermore, the Financial Forecasts and the Adjusted Heinz Forecasts do not take into account any circumstances or events occurring after the date they were prepared, including the merger.

 

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Heinz’s Reasons for the Merger

At its meeting held on March 20, 2015, after due consideration and consultation with Heinz’s management and legal and financial advisors, the Heinz board approved entry into the merger agreement and the merger and the other transactions contemplated by the merger agreement, including the issuance of Kraft Heinz common stock to Kraft shareholders as merger consideration and the adoption of the new Kraft Heinz charter and the new Kraft Heinz by-laws. In doing so, the Heinz board considered the business, assets and liabilities, results of operations, financial performance, strategic direction and prospects of Kraft and determined that the merger was in the best interests of Heinz and its shareholders. In making its determination, the Heinz board focused on a number of factors, including the following:

Kraft is a Fundamentally Attractive Business. The Heinz board considered that Kraft is the fourth largest food and beverage company in North America with a leading market position in growing categories.

Strategic Fit within Heinz. The Heinz board considered that the combination of Heinz and Kraft would:

 

    meaningfully increase Heinz’s scale in North America across both retail and foodservice, creating the third largest food and beverage company in North America;

 

    meaningfully enhance Heinz’s liquidity in the United States, based on Kraft’s free cash flow generation;

 

    diversify Heinz’s category exposure across a variety of new growing and stable product categories such as cheese and meats; and

 

    create an opportunity to leverage Heinz’s existing international infrastructure to expand the presence of Kraft brands overseas.

Potential to Improve Profitability and Cash Flow. The Heinz board considered that the combination of Heinz and Kraft would create opportunities to implement operating efficiencies and realize synergies, including estimated annual cost savings of up to $1.5 billion. The merger would also improve the working capital profile of Heinz.

Investment Grade Credit Ratings. The Heinz board considered the likelihood that the combined company would have an investment grade credit rating from and after the closing of the merger, providing more dependable and economical access to capital markets and enhancing financial flexibility.

The Heinz board also considered a number of potentially negative factors in its deliberations concerning the merger, including:

 

    the difficulties and management challenges inherent in completing the merger and integrating the businesses, operations and workforce of Kraft with those of Heinz;

 

    the possibility of encountering difficulties in achieving expected growth and cost savings;

 

    the risk that Kraft’s financial performance may not meet Heinz’s expectations;

 

    the risk associated with expansion by Heinz into new business areas, and the risk that failure to retain key Kraft personnel may make integration of such businesses challenging;

 

    the risk that all conditions to the obligations of the parties to consummate the merger might not be satisfied or that the merger might not otherwise be completed, or that completion may be unduly delayed, including the effect of the pendency of the merger and the effect such failure to be completed may have on:

 

    Heinz’s operating results, particularly in light of the costs incurred in connection with the merger; and

 

    Heinz’s ability to attract and retain key personnel, suppliers and customers; and

 

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    the risk that regulatory agencies may object to and challenge the merger or may impose terms and conditions in order to resolve those objections that adversely affect the financial results of the combined company.

The foregoing discussion of the information and factors that the Heinz board considered is not intended to be exhaustive, but rather is meant to include the material factors that the Heinz board considered. The Heinz board collectively reached the conclusion to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement in light of the various factors described above and other factors that the members of the Heinz board believed were appropriate. In view of the complexity and wide variety of factors, both positive and negative, that the Heinz board considered in connection with its evaluation of the merger, the Heinz board did not find it practical, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision. Rather, in considering the various factors, individual members of the Heinz board considered all of these factors as a whole and concluded, based on the totality of information presented to them and the investigation conducted by it, that, on balance, the positive factors outweighed the negative factors and that they supported a determination to adopt the merger agreement and declare it to be in the best interests of the shareholders of Heinz. In considering the factors discussed above, individual directors may have given different weights to different factors.

See the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page [] of this proxy statement/prospectus.

Approval of the New Kraft Heinz Charter and Issuance of Kraft Heinz Common Stock

Concurrently with entering into the merger agreement, Heinz obtained all approvals and consents of its holders of capital stock necessary to effect the merger and the other transactions contemplated by the merger agreement, including approval of the issuance of Kraft Heinz common stock as merger consideration to the Kraft shareholders and the amendment of the Heinz charter to be in the form of the new Kraft Heinz charter. No further approvals by the holders of Heinz common stock are required to consummate the merger or the other transactions contemplated by the merger agreement.

Governance of The Kraft Heinz Company Following the Merger

Name of Company; Headquarters

Heinz and Kraft have agreed that:

 

    At the effective time of the merger, the name of H.J. Heinz Holding Corporation will be changed to “The Kraft Heinz Company” and the name of H. J. Heinz Company, which is H.J. Heinz Holding Corporation’s principal operating subsidiary, will be changed to a name to be agreed upon between Heinz and Kraft, consistent with the naming convention of “The Kraft Heinz Company”; and

 

    The Kraft Heinz Company will have co-corporate headquarters, one in the Chicago, Illinois metropolitan area and the other in Pittsburgh, Pennsylvania.

Board of Directors

Heinz and Kraft have agreed that, upon completion of the merger:

At the effective time of the merger, the board of directors of The Kraft Heinz Company will be comprised of 11 members. The members of the board are expected to be:

 

    Mr. Alexandre Behring, Mr. Jorge Paulo Lemann and Mr. Marcel Herrmann Telles (each of whom was selected by 3G Capital);

 

    Mr. Gregory Abel, Mr. Warren E. Buffett and Ms. Tracy Britt Cool (each of whom was selected by Berkshire Hathaway); and

 

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    Mr. John T. Cahill, Mr. L. Kevin Cox, Ms. Jeanne P. Jackson, Mr. Mackey J. McDonald and Mr. John C. Pope (each of whom was selected by Kraft).

Mr. Alexandre Behring will serve as chairman of the combined company board of directors.

Mr. John T. Cahill will serve as vice chairman of the combined company board of directors.

The board of directors of the combined company will have an Operations and Strategy Committee comprised of three members, including Mr. John T. Cahill (who will be the Chair of the Operations and Strategy Committee) and two members selected by Heinz with one such member being affiliated with 3G Capital and the other with Berkshire Hathaway. In addition, the board of directors of the combined company following the merger will have a standing audit committee, a compensation committee and a nominating and corporate governance committee. Mr. John C. Pope will serve as chair of the audit committee of the board of directors of The Kraft Heinz Company.

There are no agreements between Kraft and Heinz regarding, and no decisions have been made with respect to, the selection of directors of The Kraft Heinz Company following the merger, other than the selection of directors to serve on the initial board of directors upon the closing of the merger. The nomination of future directors will be determined in due course by the board of directors of the combined company and based on the recommendation of the nominating and corporate governance committee of the board of directors of the combined company. 3G and Berkshire Hathaway will enter into a shareholders’ agreement upon the closing of the merger that will govern how each party and their affiliates will vote the shares of Kraft Heinz common stock held by them as of the closing date of the merger with respect to supporting certain directors that are designated by either 3G Global Food Holdings or Berkshire Hathaway. The new Kraft Heinz charter will include limitations on the removal of directors as described under the section entitled “Description of Kraft Heinz Capital Stock—Anti-takeover Effects of Certain Provisions of the New Kraft Heinz Charter and the New Kraft Heinz By-Laws—Removal of Directors” beginning on page [] of this proxy statement/prospectus. See also “Risk Factors—Risks Related to Ownership of Kraft Heinz Common Stock—Following the merger, the Sponsors will have substantial control over the combined company and may have conflicts of interest with the combined company in the future” beginning on page [] of this proxy statement/prospectus for information regarding the impact of the Sponsors’ substantial control over the combined company.

For a discussion of the material interests of the directors of Kraft in the merger that are in addition to, and different from, their interests as shareholders, see the sections entitled “Financial Interests of Kraft’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement/prospectus.

Management

Heinz and Kraft expect that following the merger Mr. Bernardo Hees will continue as Chief Executive Officer of the combined company. The rest of The Kraft Heinz Company’s executive team will be identified in due course prior to the closing of the merger.

For a discussion of the material interests of the executive officers of Kraft in the merger that are in addition to, and different from, their interests as shareholders, see the sections entitled “Financial Interests of Kraft’s Directors and Executive Officers in the Merger” beginning on page [] of this proxy statement/prospectus.

Amendment and Restatement of Heinz Charter and By-Laws

Pursuant to the terms of the merger agreement, immediately prior to the closing of the merger, Heinz’s charter and by-laws will be amended to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. The new Kraft Heinz charter will, among other things, expand the number of directors from six to 11, increase the number of authorized shares of common stock from

 

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4,000,000,000 to 5,000,000,000, increase the number of authorized shares of preferred stock from 80,000 to 1,000,000 and effectuate the pre-closing Heinz share conversion whereby each share of Heinz common stock outstanding immediately prior to the merger (including shares of Heinz common stock to be issued pursuant to the equity investment), will be automatically reclassified and changed into 0.443332 of a share of a share of Heinz common stock.

Closing and Effective Time of the Merger

The closing of the merger will take place on a date to be specified by Heinz and Kraft, which shall be no later than the second business day following the satisfaction or (to the extent permitted by law) waiver by the party or parties entitled to the benefits thereof of the conditions to the closing of the merger (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or (to the extent permitted by law) waiver of those conditions), or at such other place, time and date as shall be agreed in writing between Heinz and Kraft. Subject to the satisfaction or waiver of the conditions to the closing of the merger described in the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page [] of this proxy statement/prospectus, including the approval of the merger proposal by Kraft shareholders at the special meeting, it is anticipated that the merger will close in the second half of 2015. It is possible that factors outside the control of both companies could result in the merger being completed at a different time, or not at all.

The effective time will occur on the closing date of the merger as the parties may agree and specify in the articles of merger.

Regulatory Approvals

Completion of the merger is subject to the receipt of certain required regulatory approvals, including the receipt of antitrust clearance in the United States and Canada. Under the HSR Act and the rules promulgated thereunder, the merger may not be completed until notification and report forms have been filed with the FTC and the DOJ and the applicable waiting period (or any extensions thereof) has expired or been terminated. Under the Competition Act (Canada), the merger may not be completed until an ARC has been received or the applicable waiting period (or any extension thereof) under the Competition Act has expired, been terminated or waived (for example through the receipt of a no action letter).

On April 6, 2015, 3G Special Situations Fund III, L.P., Berkshire Hathaway and Kraft filed with the FTC and the DOJ notification and report forms under the HSR Act with respect to the proposed merger. The waiting period with respect to the notification and report forms filed under the HSR Act expires 30 calendar days after such filings, unless otherwise extended or terminated. On May 6, 2015, 3G Special Situations Fund III, L.P. and Berkshire Hathaway voluntarily withdrew their notification and report forms under the HSR Act and refiled such forms on May 8, 2015, thereby extending the waiting period for an additional 30 calendar days from the date of refiling. On April 15, 2015, Heinz and Kraft filed with the Canadian Competition Bureau their respective notifications under the Competition Act with respect to the proposed merger and Heinz filed an application for an ARC or no action letter. On May 15, 2015, prior to the expiry of the waiting period under the Competition Act, the Canadian Competition Bureau issued a Supplementary Information Request which has the effect of extending the waiting period for a period that will expire 30 calendar days after a complete response to the Supplementary Information Request is provided to the Competition Bureau (unless such waiting period is terminated early).

At any time before or after consummation of the merger, notwithstanding the termination of the waiting periods under the HSR Act and Competition Act, the DOJ, FTC, or any U.S. state, could take such action under the antitrust laws as each deems necessary or desirable in the public interest, including seeking to enjoin the completion of the merger or seeking divestiture of substantial assets of Heinz and Kraft. Private parties also may seek to take legal action under the antitrust laws under certain circumstances. The Canadian Competition Bureau

 

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also has the authority to seek to enjoin the completion of a merger, or to seek divestiture of substantial assets. In the case of a merger that has already been consummated, this authority is available for one year following closing unless an ARC has been issued.

There can be no assurance that the DOJ, the FTC, the Canadian Competition Bureau or any other governmental entity or any private party will not attempt to challenge the merger on antitrust or competition grounds, and, if such a challenge is made, there can be no assurance as to its result. Under the merger agreement, Heinz and Kraft generally must take all necessary actions to obtain all regulatory approvals required to complete the merger, including the expiration or early termination of the waiting periods under the HSR Act and Competition Act. However, neither Heinz nor Kraft is required under the merger agreement to accept or agree to sell or otherwise dispose of any portion of its business, assets or operations in order to obtain such regulatory approvals if doing so would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition of Heinz, Kraft and their respective subsidiaries, taken as a whole. 3G Capital, Berkshire Hathaway and their respective affiliates (other than Heinz and its subsidiaries) will not be required to sell, divest or dispose of, or enter into any other arrangements or take any other remedy action with respect to, their assets, properties or businesses pursuant to the merger agreement. For a description of the parties’ obligations with respect to regulatory approvals related to the merger, see the section entitled “The Merger Agreement—Efforts to Complete the Merger; Regulatory Approvals” beginning on page [] of this proxy statement/prospectus.

Federal Securities Law Consequences

Following the effectiveness of the registration statement on Form S-4, of which this proxy statement/prospectus forms a part, shares of Kraft Heinz common stock issued in the merger will not be subject to any restrictions on transfer arising under the Securities Act or the Exchange Act, except for shares of Kraft Heinz common stock issued to any Kraft shareholder who may be deemed an “affiliate” for the purposes of Rule 144 of the Securities Act of The Kraft Heinz Company after the completion of the merger. Persons who may be deemed “affiliates” of the combined company generally include individuals or entities that control, are controlled by or are under common control with, the combined company and may include the executive officers and directors of the combined company as well as its principal shareholders. See “Other Related Agreements—Registration Rights Agreement” beginning on page [] of this proxy statement/prospectus.

This proxy statement/prospectus does not cover resales of Kraft Heinz common stock received by any person upon the completion of the merger, and no person is authorized to make any use of this proxy statement/prospectus in connection with any resale of Kraft Heinz common stock.

Accounting Treatment

Heinz prepares its financial statements in accordance with GAAP. The merger will be accounted for using the acquisition method of accounting. Heinz will be treated as the acquiror for accounting purposes.

Dividend Policy Following the Merger

Following the merger, the parties intend to maintain Kraft’s current quarterly cash dividend per share and expect to continue to increase it over time. Any dividends or changes to dividend policy will be made at the discretion of the board of directors and will depend upon many factors, including The Kraft Heinz Company’s financial condition, earnings, legal requirements, including limitations imposed by Delaware law, terms of the outstanding shares of Series A Preferred Stock, restrictions in The Kraft Heinz Company’s debt agreements that limit its ability to pay dividends to shareholders, restrictions in the Series A Preferred Stock and other factors the board of directors deems relevant. Furthermore, because The Kraft Heinz Company will be a holding company with no operations of its own, any dividend payments depend on the cash flow of its subsidiaries. The terms of Heinz’s debt agreements generally restrict or limit its subsidiaries’ ability to pay cash dividends to Heinz, so the

 

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amount of cash that will be available to The Kraft Heinz Company to pay dividends may be limited, to the extent such agreements remain in place after the merger. The Series A Preferred Stock prohibits the payment of any dividends on Kraft Heinz common stock at any time that dividends on the Series A Preferred Stock are past due. See the sections entitled “Risk Factors—Risks Relating to Ownership of Kraft Heinz common stock—Heinz’s ability to pay regular dividends to its shareholders is subject to the discretion of Heinz’s board of directors and may be limited by Heinz’s debt agreements and limitations in Delaware law” and “Related Person Transactions” beginning on page [] of this proxy statement/prospectus.

[] Market Listing

Heinz common stock is currently not traded or quoted on a stock exchange or quotation system. Following the merger, Kraft Heinz common stock is expected to be listed for trading on the []. It is anticipated that Kraft Heinz common stock will be listed under the symbol “[].”

Delisting and Deregistration of Kraft Common Stock

If the merger is completed, Kraft common stock will be delisted from NASDAQ and deregistered under the Exchange Act, and Kraft will no longer be required to file periodic reports with the SEC.

Litigation Related to the Merger

Since the announcement of the merger, six complaints have been filed by purported shareholders of Kraft.

On March 31, 2015, a law firm representing a purported Kraft shareholder sent a letter, which we refer to as the Samouha Demand Letter, to the Kraft board alleging breaches of fiduciary duty related to the proposed merger and demanding that Kraft conduct an investigation and take certain other actions.

The Kraft board thereafter formed a committee to review and investigate, with independent counsel, the alleged breaches of fiduciary duties set forth in the Samouha Demand Letter and any subsequently received purported demand letters and to determine the responses thereto.

On April 27, 2015, a purported shareholder of Kraft filed a putative class action lawsuit against Kraft and members of the Kraft board, and against Heinz and two of its affiliates, in the United States District Court for the Eastern District of Virginia, captioned Steven E. Leitz, Individually and on Behalf of All Others Similarly Situated v. Kraft Foods Group, Inc., et al., Case 3:15-cv-00262-HEH (the “Leitz Action”). The plaintiff in the Leitz Action alleges that the registration statement of which this proxy statement/prospectus forms a part contains material omissions and misleading statements in violation of Section 14(a) and 20(a) of the Exchange Act. The plaintiff in the Leitz Action seeks, among other things, injunctive relief enjoining Kraft and Heinz from consummating the proposed transaction until Kraft discloses all material information in connection with the transaction to shareholders, rescission in the event the merger is consummated, damages and an award of attorneys’ and other fees and costs.

Also on April 27, 2015, a law firm representing a purported Kraft shareholder sent a letter to the Kraft board alleging breaches of fiduciary duty related to the proposed merger and demanding that the Kraft board conduct an investigation and take certain other actions, which we refer to as the Klocke Demand Letter. The Klocke Demand Letter indicated that that law firm’s client may take legal action.

On May 6, 2015, two purported shareholders of Kraft, one of whom is the same purported shareholder on the behalf of whom the Klocke Demand Letter had been sent to the Kraft board, filed a putative class action lawsuit against Kraft and members of the Kraft board, and against Heinz and two of its affiliates in the United States District Court for the Eastern District of Virginia, captioned John Klocke and Michael Reed, Individually and on Behalf of All Others Similarly Situated v. Kraft Foods Group, Inc., et al., Case 3:15-cv-00281-JRS, which

 

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we refer to as the Klocke Action. In addition to Section 14(a) and 20(a) claims substantially similar to those alleged in the Leitz Action, the complaint alleges that the members of the Kraft board breached their fiduciary duties to Kraft’s shareholders by failing to fully disclose material information regarding the proposed transaction and by adopting the merger agreement for inadequate consideration and pursuant to an inadequate process. It further alleges that Heinz, merger sub I and merger sub II aided and abetted the Kraft board in its alleged breaches of fiduciary duty. The plaintiff in the Klocke Action seeks substantially the same relief as that sought by the plaintiff in the Leitz Action.

On May 1, 2015, the same purported shareholder of Kraft on behalf of whom the Samouha Demand Letter had been sent to the Kraft board filed a derivative action on behalf of Kraft against the Kraft board, as well as against Heinz and two of its affiliates, in Henrico County Circuit Court, Virginia, captioned Tova Samouha, Individually and on Behalf of All Others Similarly Situated v. Kraft Foods Group, Inc., et al., Case CL15-1132, which we refer to as the Samouha Action. The plaintiff in the Samouha Action alleges fiduciary duty and aiding and abetting claims substantially similar to those alleged in the Klocke Action. The plaintiff in the Samouha Action seeks substantially the same relief as that sought by the plaintiff in the Leitz and Klocke Actions.

On May 12, 2015, a purported shareholder of Kraft filed a putative class action lawsuit against Kraft and the members of the Kraft board, and against Heinz, merger sub I and merger sub II, in the United States District Court for the Eastern District of Virginia, captioned Robert Meyer IRA FBO Robert Meyer, on Behalf of Itself and All Others Similarly Situated v. Kraft Foods Group, Inc., et al., Case 3:15-cv-00289-HEH, which we refer to as the Meyer Action. The plaintiff in the Meyer Action alleges substantially the same claims as those set forth in the Klocke Action and seeks substantially the same relief as that sought by the plaintiff in the Leitz, Klocke and Samouha Actions.

On May 13, 2015, a purported shareholder of Kraft filed a putative class action lawsuit against the members of the Kraft board, and against Heinz and two of its affiliates, in the United States District Court for the Northern District of Illinois, captioned Brendan Foote, on Behalf of Himself and All Others Similarly Situated v. John T. Cahill, et al., Case 1:15-cv-04236-EEB, which we refer to as the Foote Action. Kraft is not named as a defendant. The plaintiff in the Foote Action alleges substantially the same claims as those set forth in the Klocke Action against the Kraft board and seeks substantially the same relief as that sought by the plaintiff in the Leitz, Klocke, Samouha and Meyer Actions.

On May 14, 2015, a purported shareholder of Kraft filed a putative class action lawsuit against Kraft and the members of the Kraft board and against Heinz and two of its affiliates in the United States District Court for the Eastern District of Virginia, captioned Sam Wietschner & Tova Wietschner TRS for Sam Wietschner Pension Plan UA April 1, 1990, Individually and on Behalf of All Others Similarly Situated v. Kraft Foods Group, Inc., et al., Case 3:15-cv-00292-HEH, which we refer to as the “Wietschner Action”. The plaintiff in the Wietschner Action alleges substantially the same claims as those set forth in the Leitz Action and seeks substantially the same relief as that sought by the plaintiffs in the Leitz, Klocke, Samouha, Meyer, and Foote Actions.

Kraft and Heinz believe that each of these actions is without merit and intend to defend each of them vigorously.

 

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THE MERGER AGREEMENT

Explanatory Note Regarding the Merger Agreement

The following section summarizes material provisions of the merger agreement, which is included in this proxy statement/prospectus as Annex A and is incorporated herein by reference in its entirety. The rights and obligations of each of Heinz, merger sub I, merger sub II and Kraft are governed by the express terms and conditions of the merger agreement and not by this summary or any other information contained in this proxy statement/prospectus. Kraft shareholders are urged to read the merger agreement carefully and in its entirety as well as this proxy statement/prospectus before making any decisions regarding the merger, including the approval of the merger proposal.

The merger agreement is included in this proxy statement/prospectus to provide you with information regarding its terms and is not intended to provide any factual information about Heinz, merger sub I, merger sub II or Kraft. The merger agreement contains representations and warranties by each of the parties to the merger agreement. These representations and warranties have been made solely for the benefit of the other parties to the merger agreement and:

 

    may not be intended as statements of fact, but rather as a way of allocating the risk between the parties in the event the statements therein prove to be inaccurate;

 

    have been qualified by certain disclosures that were made between the parties in the merger agreement, which disclosures are not reflected in the merger agreement itself; and

 

    may apply standards of materiality in a way that is different from what may be viewed as material by you or other investors.

Accordingly, the representations and warranties and other provisions of the merger agreement should not be read alone, but instead should be read together with the information provided elsewhere in this proxy statement/prospectus and in the documents of Kraft incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page [] of this proxy statement/prospectus.

This summary is qualified in its entirety by reference to the merger agreement.

Description of the Merger Agreement

Terms of the Merger; Merger Consideration

The merger agreement provides that, on the terms and subject to the conditions set forth in the merger agreement and in accordance with the Virginia Stock Corporation Act, which we refer to as the VSCA, at the effective time of the merger, merger sub I will be merged with and into Kraft, with Kraft surviving the merger as a direct wholly owned subsidiary of The Kraft Heinz Company. Immediately following the merger, Kraft, as the surviving corporation in the merger, will be merged with and into merger sub II, with merger sub II surviving the subsequent merger as a direct wholly owned subsidiary of The Kraft Heinz Company. Immediately following the effective time of the subsequent merger, The Kraft Heinz Company will engage in the internal transactions. At the effective time of the merger, by virtue of the merger and without any action on the part of Heinz, merger sub I, merger sub II or Kraft, or the holders of any shares of Kraft common stock, each issued and outstanding share of Kraft common stock (other than deferred shares and restricted shares in Kraft) will be converted into the right to receive one fully paid and nonassessable share of Kraft Heinz common stock, which we refer to as the merger consideration. In addition, the holders of record of the issued and outstanding shares of Kraft common stock as of a record date immediately prior to the effective time of the merger will each be entitled to receive the special cash dividend of $16.50 per share in respect of each share of Kraft common stock held by them.

The merger consideration, the Heinz share conversion ratio and the special dividend per share amount will be adjusted appropriately and proportionately to fully reflect the effect of any stock dividend, subdivision,

 

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reorganization, reclassification, recapitalization, stock split, reverse stock split (except in connection with the pre-closing Heinz share conversion), combination, exchange of shares or other similar event with respect to the shares of Heinz common stock and/or Kraft common stock occurring after the date of the merger agreement and prior to the effective time of the merger.

Completion of the Merger

Pursuant to the terms of the merger agreement, immediately prior to the effective time of the merger, Heinz’s charter and by-laws will be amended and restated to be in substantially the forms attached as Annex C and Annex D, respectively, of this proxy statement/prospectus. As a result of the amendment to the Heinz charter, each share of Heinz common stock issued and outstanding immediately prior to the effective time of the merger (including shares of Heinz common stock to be issued pursuant to the equity investment) will be reclassified and changed into 0.443332 of a share, which we refer to as the Heinz share conversion ratio, of Heinz common stock. No fractional shares of Heinz common stock will be issued in connection with the pre-closing Heinz share conversion, and each holder of shares of Heinz common stock converted pursuant to the pre-closing Heinz share conversion who would otherwise have been entitled to receive a fraction of a share of Heinz common stock will receive cash in lieu thereof in accordance with the new Kraft Heinz charter. In connection with the pre-closing Heinz share conversion, the number of shares of Heinz common stock issuable upon the exercise of the Berkshire warrant will automatically be adjusted in accordance with the terms of the Berkshire warrant.

The closing of the merger will take place on a date to be specified by Heinz and Kraft, which shall be no later than the second business day following the satisfaction or (to the extent permitted by law) waiver by the party or parties entitled to the benefits thereof of the conditions to the closing of the merger (other than those conditions that by their nature are to be satisfied at the closing, but subject to the satisfaction or (to the extent permitted by law) waiver of those conditions), or at such other place, time and date as shall be agreed in writing between Heinz and Kraft. The parties will cause the merger to be consummated by filing with the State Corporation Commission, which we refer to as the SCC, of the Commonwealth of Virginia articles of merger meeting the requirements of Section 13.1-720 of the VSCA, along with all other filings required under the VSCA or by the SCC in connection with the merger. The merger will become effective at such time on the closing date as the parties will agree and specify in the articles of merger.

Heinz and Kraft currently expect the closing of the merger to occur in the second half of 2015. However, as the merger is subject to the receipt of certain required regulatory clearances, including the receipt of antitrust clearance in the United States and Canada, and the satisfaction or waiver of other conditions described in the merger agreement, it is possible that factors outside the control of Heinz and Kraft could result in the merger being completed at a later time or not at all.

Exchange of Shares in the Merger

At the effective time of the merger, by virtue of the merger and without any action on the part of Heinz, merger sub I, merger sub II or Kraft, or the holders of any shares of Kraft common stock, each issued and outstanding share of Kraft common stock will be converted into the right to receive one fully paid and nonassessable share of Kraft Heinz common stock. Prior to the effective time of the merger, Heinz and Kraft will appoint an exchange agent for the delivery of the merger consideration and the special dividend in respect of each share of Kraft common stock to the holders thereof. As soon as reasonably practicable after the effective time of the merger, each holder of record of Kraft common stock will be entitled to receive the merger consideration and the special dividend in respect thereof upon the exchange agent’s receipt of an “agent’s message” in customary form.

At the effective time of the merger, each share of Kraft common stock issued and outstanding immediately prior to the effective time will no longer be outstanding, will be automatically canceled and will cease to exist and each book-entry that previously represented a share of Kraft common stock will represent only the right to

 

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receive the merger consideration and any dividends or other distributions (including the special dividend) declared but not yet paid by Kraft prior to, or declared by Heinz after, the effective time of the merger, to which the holders of the applicable book-entries in respect of Kraft common stock were entitled to receive as record holders on the applicable record date for such dividends or other distributions. With respect to such shares of Kraft Heinz common stock deliverable upon the surrender of Kraft shares, until the exchange agent has received an “agent’s message,” those holders will not receive the merger consideration or any dividends or distributions (including the special dividend) with respect to such shares of Kraft Heinz common stock to be issued in exchange therefor.

Representations and Warranties

The merger agreement contains generally reciprocal representations and warranties, except as otherwise indicated below. Each of Heinz and Kraft has made representations and warranties regarding, among other things:

 

    organization, standing and corporate or other organizational power;

 

    ownership of subsidiaries;

 

    capital structure;

 

    authority with respect to the execution and delivery of the merger agreement, and the due and valid execution and delivery and enforceability of the merger agreement;

 

    absence of conflicts with, or violations of, organizational documents, other contracts and applicable laws;

 

    required regulatory filings and consents and approvals of governmental entities;

 

    accuracy of SEC reports;

 

    fair presentation and GAAP compliance with respect to financial statements;

 

    absence of undisclosed liabilities and off-balance-sheet arrangements;

 

    advisors’ fees payable in connection with the merger and the other transactions contemplated by the merger agreement;

 

    absence of certain changes and events from the date of the most recent audited financial statements to the date of execution of the merger agreement;

 

    conduct of business in the ordinary course since the date of the most recent audited financial statements;

 

    absence of certain litigation;

 

    tax matters;

 

    labor and benefits matters, including matters related to employee benefit plans, and ERISA compliance;

 

    internal controls and disclosure controls and procedures;

 

    compliance with applicable laws and permits;

 

    certain contracts;

 

    environmental matters;

 

    inapplicability of state takeover statutes;

 

    accuracy of information supplied or to be supplied for use in this proxy statement/prospectus;

 

    absence of certain transactions, contracts or arrangements with affiliates;

 

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    intellectual property;

 

    quality and safety of products;

 

    compliance with anti-corruption laws;

 

    enforceability of equity investment letters of 3G Global Food Holdings and Berkshire Hathaway (solely in the case of Heinz); and

 

    receipt of an opinion from Centerview Partners LLC as to the fairness, from a financial point of view, of the merger consideration to Kraft shareholders (solely in the case of Kraft).

The merger agreement also contains certain representations and warranties with respect to merger sub I and merger sub II including, without limitation, corporate organization, lack of prior business activities, capitalization, absence of material assets or liabilities and authority with respect to the execution and delivery of the merger agreement.

Many of the representations and warranties in the merger agreement are qualified by a “materiality” or “material adverse effect” standard (that is, they will not be deemed to be untrue or incorrect unless their failure to be true or correct would be material or, individually or in the aggregate (or with respect to certain specified representations, individually but not in the aggregate), would have a material adverse effect, as the case may be). For purposes of the merger agreement, a “material adverse effect” means, with respect to a person, any events or developments that, individually or in the aggregate, have a material adverse effect on the business, properties, financial condition or results of operations of such person and its subsidiaries, taken as a whole, except that the definition of “material adverse effect” excludes any effect that results from or arises in connection with:

 

    changes or conditions generally affecting the industries in which such person and any of its subsidiaries operate;

 

    general economic or regulatory, legislative or political conditions or securities, credit, financial or other capital markets conditions (including prevailing interest rates, access to capital and commodity prices) in the United States or any foreign jurisdiction;

 

    any failure, in and of itself, by such person to meet any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics for any period (however, the facts or occurrences giving rise to or contributing to such a failure may be deemed to constitute or be taken into account in determining whether there has been or would reasonably be expected to be a material adverse effect if such facts or occurrences are not otherwise described in bullets one, two or four through eight of this paragraph);

 

    entering into the merger agreement, the performance by any party of its obligations under the merger agreement or the public announcement or pendency of the merger or any of the other transactions contemplated by the merger agreement, including the impact thereof on the relationships of such person or any of its subsidiaries with employees, labor unions, customers, suppliers or partners and including any fiduciary duty, disclosure or third party contract-related lawsuit in connection with the merger (except that this exclusion does not apply to any representations or warranties for which the primary purpose, as is reasonably apparent on the face of such representations and warranties, is to address consequences resulting from the execution and delivery of the merger agreement);

 

    any change, in and of itself, in the market price, credit rating or trading volume of such person’s securities (however, the facts or occurrences giving rise to such a change may be deemed to constitute or be taken into account in determining whether there has been or would reasonably be expected to be a material adverse effect if such facts or occurrences are not otherwise described in bullets one through four or six through eight of this paragraph);

 

    any change in applicable law or GAAP (or authoritative interpretation thereof);

 

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    geopolitical conditions, the outbreak of a pandemic or other widespread health crisis, the outbreak or escalation of hostilities, any acts of war, sabotage or terrorism, or any escalation or worsening of any such acts of war, sabotage or terrorism threatened or underway as of the date of the merger agreement; or

 

    any hurricane, tornado, flood, earthquake, volcano eruption or natural disaster,

unless and to the extent, in the case of bullets one, two and six through eight, such facts or occurrences have had or would reasonably be expected to have a disproportionate adverse effect on such person and its subsidiaries, as compared to other companies operating in the industries in which such person and its subsidiaries operate.

Conduct of Business

Each of Heinz and Kraft has agreed to certain covenants in the merger agreement governing the conduct of its business between the date of the merger agreement and the effective time of the merger. In general, each of Heinz and Kraft has agreed to (i) conduct its business in the ordinary course in all material respects and (ii) use commercially reasonable efforts to maintain and preserve intact its business organization and advantageous business relationships, except in each case, as required by law, as expressly contemplated or permitted by the merger agreement, as disclosed in writing to the other party prior to the signing of the merger agreement or as consented to by the other party.

In addition, each of Heinz and Kraft has agreed to specific restrictions relating to the conduct of its business between the date of the merger agreement and the effective time of the merger, including, but not limited to, the following, except in each case, as required by law, as expressly contemplated or permitted by the merger agreement, as disclosed in writing to the other party prior to the signing of the merger agreement or as consented to in writing by the other party:

 

    incurring any indebtedness, making any loan or advance or entering into any swap or hedging transaction, except for (i) indebtedness incurred under Heinz’s or Kraft’s existing revolving credit facilities in the ordinary course of business (less, in the case of Kraft, any indebtedness incurred under Kraft’s commercial paper facilities of the type described in clause (ii) below), (ii) in the case of Kraft, up to $600,000,000 of indebtedness incurred under Kraft’s commercial paper facilities (in addition to any such indebtedness incurred of the type described in clause (iii) below), (iii) in the case of Kraft, up to $1,400,000,000 of indebtedness incurred in connection with the refinancing of certain Kraft debt, (iv) in the case of Heinz, indebtedness applied to refinance existing indebtedness, (v) intercompany loans or advances or (vi) commodities and foreign exchange hedging contracts entered into in the ordinary course of business consistent with past practice, in each case providing for forward coverage of no more than 12 months, in the case of Heinz, and nine months, in the case of Kraft;

 

    adjusting, splitting, combining, or reclassifying any of its capital stock (other than, in the case of Heinz, pursuant to the pre-closing Heinz share conversion);

 

    making, declaring or paying dividends or other distributions on any of its capital stock (except (i) in the case of Kraft, regular quarterly dividends in an amount not to exceed $0.55 per share or, beginning in Kraft’s third fiscal quarter, $0.5775 per share, in each case with a record date not more than two days prior to the anniversary of the record date of Kraft’s regular quarterly dividend for the corresponding quarter of the previous fiscal year and (ii) in the case of Heinz, any regular quarterly dividends, past due dividends and additional dividends on the Series A Preferred Stock outstanding on the date of the merger agreement pursuant to its terms as in effect on the date of the merger agreement);

 

    issuing, delivering, selling, granting, pledging or otherwise encumbering shares of its capital stock, or other voting securities or equity interests (with certain exceptions, including in respect of exercise or settlement of equity-based awards outstanding on the date of the merger agreement);

 

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    increasing compensation and benefits paid to employees, other than as required pursuant to existing benefit plans or certain increases below the employee director level in the ordinary course of business, or hiring employees at the level of employee director or above;

 

    accelerating the timing of payment or vesting of any compensation or benefits or entering into, amending or terminating any benefit plans other than as required pursuant to existing benefit plans;

 

    except as required by applicable law, making changes or modifications in respect of defined benefit plans or taking any action that would increase liabilities under, or changing the asset allocation strategy of, or the manner in which contributions are made to, any defined benefit plans;

 

    selling, transferring, mortgaging, encumbering or otherwise disposing of any of its properties or assets, or canceling, releasing or assigning any material indebtedness or any material claim, in each case, other than in the ordinary course of business consistent with past practice;

 

    entering into any material new line of business;

 

    settling claims, actions or proceedings if such settlement would require any payment in excess of $10,000,000 individually, or $25,000,000 in the aggregate, or would obligate Heinz or any of its subsidiaries or Kraft or any of its subsidiaries, as applicable, to take any material action or impose any material restrictions on its respective business;

 

    making any acquisition or investment or making any capital expenditure other than (i) investments in Heinz subsidiaries or Kraft subsidiaries, as applicable, (ii) acquisitions of, or improvements to, assets used in the operations of Heinz and the Heinz subsidiaries or Kraft and the Kraft subsidiaries, as applicable, each in the ordinary course of business; (iii) short-term investments of cash in marketable securities in the ordinary course of business and (iv) capital expenditures in accordance with the capital expenditure plan disclosed in writing to the other party prior to the execution of the merger agreement;

 

    amending its charter, bylaws or equivalent organizational documents;

 

    entering into or amending any contract, or taking any other action, that would reasonably be expected to prevent or materially impede or delay the completion of the merger, except, in the case of Kraft as permitted in the merger agreement with respect to takeover proposals (this restriction applies to Heinz affiliates in addition to Heinz and its subsidiaries);

 

    making any material change in financial or tax accounting methods, except as required by a change in GAAP;

 

    entering into or amending any material contract that would be violated by the completion of the merger or compliance with the merger agreement; or

 

    except pursuant to the exercise of the fiduciary duties of its board of directors, retaining any advisors in connection with the merger or the other transactions contemplated by the merger agreement.

No Solicitation of Takeover Proposals

Pursuant to the non-solicitation provisions set forth in the merger agreement, Kraft has agreed that it will not, and it will cause its subsidiaries and its, their and its controlled affiliates’ respective transaction representatives not to, and will use its reasonable best efforts to cause its other representatives not to, and on becoming aware of it will use its best effort to stop any such persons from continuing to, directly or indirectly (i) solicit, initiate or knowingly facilitate any inquiries, proposals or offers that constitute, or that would reasonably be expected to lead to, a takeover proposal, (ii) engage or otherwise participate in any discussions or negotiations regarding, or furnish to any person any non-public information in connection with, or for the purposes of facilitating, any inquiries, proposals or offers that constitute, or that would reasonably be expected to lead to, a takeover proposal or (iii) execute or enter into any acquisition agreement.

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result in, or would reasonably be expected to lead to, a takeover proposal (other than an acceptable confidentiality agreement containing terms substantially no less restrictive to Kraft’s counterparty thereto than those applicable to Heinz in its confidentiality agreement with Kraft (subject to certain exceptions), which we refer to as an acceptable confidentiality agreement). The merger agreement also requires Kraft to immediately cease, and to cause its subsidiaries and transaction representatives to immediately cease, and to use its reasonable best efforts to cause its other representatives, to immediately cease any solicitation, discussions or negotiations with any persons that may be ongoing with respect to a takeover proposal, or any inquiry, proposal or offer that would reasonably be expected to lead to a takeover proposal, request the prompt return or destruction of all confidential information previously furnished to any person in connection with a takeover proposal and immediately terminate all physical and electronic dataroom access previously granted to any such person, its subsidiaries or its representatives.

A takeover proposal means any proposal or offer from any person or group with respect to, in a single transaction or series of related transactions, any (i) direct or indirect acquisition of 20% or more of the consolidated assets of Kraft and its subsidiaries (based on the fair market value thereof), or assets comprising 20% or more of the consolidated revenues, net income or EBITDA of Kraft and its subsidiaries, including in any such case through the acquisition of one or more Kraft subsidiaries owning such assets, (ii) direct or indirect acquisition of 20% or more of the outstanding Kraft common stock or the outstanding voting power of Kraft (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such Kraft common stock or other securities representing such voting power), (iii) tender offer or exchange offer that if consummated would result directly or indirectly in any person or group (or the shareholders of any person or group) beneficially owning 20% or more of the outstanding Kraft common stock or the outstanding voting power of Kraft or (iv) merger, consolidation, share exchange, business combination, recapitalization, liquidation, dissolution or other similar transaction involving Kraft or any of its subsidiaries which would result in any person or group (or the shareholders of any person or group) beneficially owning, directly or indirectly, 20% or more of the outstanding voting power of Kraft or of the surviving entity in a merger involving Kraft or the resulting direct or indirect parent of Kraft or such surviving entity (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, securities representing such voting power).

The merger agreement requires that Kraft promptly (and in any event within 24 hours) notify Heinz in writing of the receipt by Kraft, any of its subsidiaries or any of its transaction representatives of any takeover proposal, identify the person or group making the takeover proposal and provide to Heinz an unredacted copy of the takeover proposal, if made in writing, and unredacted copies of all written materials constituting or containing terms or conditions with respect to such takeover proposal exchanged between Kraft (or any of its subsidiaries or transaction representatives) and any third party in connection with a takeover proposal, and a written summary of all material terms and conditions of any such takeover proposal, to the extent these are not made in writing. In addition, the merger agreement requires Kraft to inform Heinz on a prompt basis, from and after such notice, of material developments with respect to any such takeover proposal or any material substantive discussions or negotiations relating to any such takeover proposal.

Notwithstanding the non-solicitation provisions described above, if at any time prior to obtaining the Kraft shareholder approval of the merger proposal, Kraft or any of its subsidiaries or transaction representatives receives a bona fide written takeover proposal not resulting in any material respect from a breach of the non-solicitation provisions of the merger agreement, Kraft or any of its subsidiaries or transaction representatives is permitted to enter into an acceptable confidentiality agreement and furnish information with respect to Kraft and enter into discussions with the person or group making such bona fide written takeover proposal and engage in or otherwise participate in discussions or negotiations with the person or group making such takeover proposal if the Kraft board determines in good faith (after consultation with its outside counsel and financial advisors) that such takeover proposal constitutes, or is reasonably likely to lead to, a superior proposal and the failure to take such actions would be reasonably likely to be inconsistent with its fiduciary duties under applicable law. In any such event, Kraft must promptly (but in any event within 24 hours) provide to Heinz any information that is provided to any person or group given such access which was not previously provided to Heinz.

 

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A superior proposal means any bona fide takeover proposal by a third party the receipt of which did not result in any material respect from a breach of the non-solicitation provisions of the merger agreement and which, if consummated, would result in such third party (or in the case of a direct merger between such third party and Kraft, the shareholders of such third party) acquiring, directly or indirectly, more than 50% of the voting power of the Kraft common stock or more than 50% of the consolidated assets of Kraft and its subsidiaries (based on the fair market value thereof) for consideration consisting of cash and/or securities that the Kraft board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisors) is more favorable to Kraft’s shareholders from a financial point of view than the merger agreement and the transactions contemplated by the merger agreement, taking into account all legal, regulatory, financial and other aspects of such proposal and of the merger agreement deemed relevant by the Kraft board or any such committee, as well as any changes to the terms of the merger and the other transactions contemplated by the merger agreement irrevocably proposed by Heinz in response to such offer.

Changes in Board Recommendations

Neither the Kraft board nor any committee thereof will (i) withhold, withdraw or modify in a manner adverse to Heinz the recommendation to Kraft shareholders that they vote in favor of the approval of the merger proposal at the special meeting, (ii) approve or recommend, or publicly propose to approve or recommend, any takeover proposal, (iii) refrain from recommending against any takeover proposal that is a tender offer or an exchange offer within ten business days after it commences or (iv) enter into or propose publicly to execute or enter into (or cause or permit Kraft or any of its subsidiaries to execute or enter into or propose publicly to execute or enter into) an acquisition agreement.

Notwithstanding the restrictions described in the immediately preceding paragraph, at any time prior to obtaining Kraft shareholder approval of the merger proposal at the special meeting, the Kraft board or any committee thereof may make an adverse recommendation change or cause Kraft to enter into an acquisition agreement with respect to a takeover proposal that did not result in any material respect from a breach of the non-solicitation obligations set forth in the merger agreement, and terminate the merger agreement if the Kraft board or any committee thereof determines in good faith (after consultation with its outside counsel and financial advisor) that to do otherwise would be reasonably likely to be inconsistent with its fiduciary duties under applicable law and, if any such action is being taken in response to a takeover proposal, that such takeover proposal constitutes a superior proposal. Prior to making an adverse recommendation change or entering into an acquisition agreement in respect of a superior proposal and terminating the merger agreement, Kraft must provide written notice, which we refer to as a notice of adverse recommendation, to Heinz advising Heinz that the Kraft board (or any committee thereof) intends to take such action and the reasons therefor. In addition, if a notice of adverse recommendation is provided in connection with a superior proposal, it must specify the material terms and conditions of the superior proposal, identify the person or persons making the superior proposal and include a copy of the most current version of the agreement or proposal and all material related documentation with respect to such superior proposal. A period of at least four business days must have elapsed following Heinz’s receipt of a notice of adverse recommendation and, if requested by Heinz, Kraft must negotiate, and must cause its subsidiaries and transaction representatives to negotiate, in good faith with Heinz during such four business day period with respect to any changes to the terms of the merger agreement proposed by Heinz during such period and take into account any changes to the terms of the merger agreement irrevocably proposed by Heinz. If there is any amendment or modification (other than an immaterial amendment or modification) to the terms of such takeover proposal, then Kraft must provide a new notice of adverse recommendation and an additional three day period to Heinz. If the Kraft board or any committee thereof determines in good faith, after consultation with its financial advisor and outside counsel, that the failure to take such action would continue to be reasonably likely to be inconsistent with its fiduciary duties under applicable law and that, in the case of any notice of adverse recommendation provided in connection with a takeover proposal, the takeover proposal would continue to constitute a superior proposal if such changes irrevocably offered by Heinz were to be given effect, the Kraft board (or any committee thereof), may make an adverse recommendation change or terminate the merger agreement and cause Kraft to enter into an acquisition agreement with respect to the superior proposal and terminate the merger agreement.

 

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For any such termination to be valid under the merger agreement, Kraft must pay Heinz a termination fee of $1.2 billion prior to or substantially concurrently with any such termination. Such termination fee will be the sole and exclusive remedy of Heinz for monetary damages. See the section entitled “The Merger Agreement—Expenses and Termination Fees; Liability for Breach” beginning on page [] of this proxy statement/prospectus.

Efforts to Obtain Required Shareholder Approval

Kraft has agreed to hold the special meeting for its shareholders and to use its reasonable best efforts to obtain shareholder approval for the merger proposal. The Kraft board has (i) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to and in the best interests of Kraft and its shareholders, (ii) approved and declared it advisable that Kraft enter into the merger agreement and (iii) adopted the merger agreement, the merger and the transactions contemplated by the merger agreement.

The Heinz board has adopted the merger agreement and determined that the terms of the merger agreement are in the best interests of Heinz and its shareholders. The Heinz shareholders have approved the issuance of shares of Kraft Heinz common stock to Kraft shareholders pursuant to the merger and the adoption of the new Kraft Heinz charter. No approvals of the Heinz shareholders are necessary to consummate the merger other than those that have already been obtained.

Efforts to Complete the Merger

Heinz and Kraft have each agreed to:

 

    take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other parties in doing, all things necessary to consummate and make effective, as promptly as practicable, the merger and the other transactions contemplated by the merger agreement;

 

    take all action necessary to ensure that no state takeover statute or similar statute or regulation is or becomes applicable to the merger agreement or any transaction contemplated by the merger agreement and, if any takeover statute or similar statute or regulation becomes applicable to the merger agreement or any transaction contemplated by the merger agreement, take all action necessary to ensure that the merger and the other transactions contemplated by the merger agreement may be consummated as promptly as practicable;

 

    provide all necessary notices, reports, registrations, submissions of information, applications and other filings to, and obtain as promptly as practicable all consents, licenses, permits, waivers, approvals, clearances, and authorizations, orders or nonactions from, any governmental entity or other person that are required to be obtained by Heinz, merger sub I, merger sub II or Kraft, or any of their respective subsidiaries, in connection with the consummation of the merger and the other transactions contemplated by the merger agreement;

 

    prosecute all such filings and consents with all appropriate diligence;

 

    furnish all information required to be furnished in connection with the consents of or filings with any governmental entity, and promptly cooperate with and furnish information in connection with any such requirements imposed upon either of them or any of their respective subsidiaries in connection with the merger agreement and the transactions contemplated by the merger agreement;

 

    execute and deliver any additional instruments necessary to consummate the merger and the other transactions contemplated by the merger agreement and to fully carry out the purposes of the merger agreement;

 

    facilitate obtaining any final order, writ, judgment or decree approving the transactions contemplated by the merger agreement;

 

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    defend any lawsuits or other legal proceedings, whether judicial or administrative, challenging the merger agreement or the consummation of the transactions contemplated by the merger agreement, including seeking to have any stay or temporary restraining order entered by any court or other governmental entity vacated or reversed; and

 

    take all actions, and do and assist and cooperate with the other in doing, all things necessary to avoid each and every legal impediment that may be asserted by any governmental entity in order to enable the parties to consummate, as promptly as practicable, the merger and the other transactions contemplated by the merger agreement, including proposing, negotiating, committing to and effecting any terms, conditions, obligations, commitments or liabilities or the entry into any other arrangements, as are necessary or reasonably advisable in order to obtain the consents, avoid the entry of, and the commencement of litigation seeking the entry of, or to effect the dissolution of, any injunction that would otherwise have the effect of materially delaying or preventing the consummation of the merger and the other transactions contemplated by the merger agreement (subject to certain exceptions described below), other than with respect to notices, reports, registrations, submissions, applications and other filings, consents, lawsuits or other legal proceedings relating to the HSR Act or any other antitrust law, which are dealt with separately as described below.

Additionally, Heinz and Kraft have each agreed to:

 

    as promptly as reasonably practicable (but in no event later than ten business days after the date of the merger agreement) make an appropriate filing of a Notification and Report Form pursuant to the HSR Act with respect to the transactions contemplated by the merger agreement;

 

    as promptly as practicable make all filings and deliver all notices required under all other antitrust laws;

 

    thereafter as promptly as practicable make all other submissions with respect to the transactions contemplated by the merger agreement required under the HSR Act and any other antitrust law and supply any additional information and documentary material that may be requested pursuant to the HSR Act and any other antitrust law;

 

    take all necessary actions to cause the expiration or termination of the applicable waiting periods under the antitrust laws of the United States or to obtain the consents required under any other applicable antitrust law as soon as practicable after the date of the merger agreement;

 

    use their reasonable best efforts to cause any such filings to be in substantial compliance with the requirements of the HSR Act or any other applicable antitrust law; and

 

    take, or cause to be taken, all actions, and do, or cause to be done, and assist and cooperate with the other in doing, all things necessary to avoid or eliminate each and every legal impediment that may be asserted under antitrust law so as to enable the parties to the merger agreement to consummate and make effective, as promptly as practicable, the merger and the other transactions contemplated by the merger agreement in accordance with its terms, including proposing, negotiating, committing to and effecting, by consent decree, hold separate orders or otherwise, the sale, divestiture or disposition of their assets, properties or businesses, and the entrance into such other arrangements, as are necessary or reasonably advisable in order to avoid the entry of, and the commencement of litigation seeking the entry of, or to effect the dissolution of, any order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition (whether temporary, preliminary or permanent) that would otherwise have the effect of materially delaying or preventing the consummation of the merger and the other transactions contemplated by the merger agreement.

Notwithstanding the foregoing, Heinz and Kraft and their respective subsidiaries are not required under the merger agreement to agree to or otherwise be required to commit to, execute or consummate any sale, divestiture, disposition or arrangement if doing so that would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the business, assets, results of operations or financial condition of Heinz, Kraft and their respective subsidiaries, taken as a whole. Further, the parties are not required to agree to any of the

 

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foregoing actions with respect to the business or operations of Heinz or Kraft and their respective subsidiaries unless their effectiveness is conditioned on the closing of the merger. Kraft cannot take or agree to any of the foregoing actions with respect to its business or operations without the prior written consent of Heinz (such consent not to be withheld, conditioned or delayed if doing so would be inconsistent with Heinz’s obligations under the merger agreement). 3G Capital, Berkshire Hathaway and their respective affiliates (other than Heinz and its subsidiaries) will not be required to sell, divest or dispose of, or enter into any other arrangements or take any other remedy action with respect to, their assets, properties or businesses pursuant to the merger agreement.

Heinz must use its reasonable best efforts to cause the shares of Kraft Heinz common stock to be issued as merger consideration and any shares of Kraft Heinz common stock issuable following the effective time of the merger in respect of the stock-based awards to be approved for listing on NASDAQ or the NYSE, as selected by Heinz in consultation with Kraft, subject to official notice of issuance prior to the closing date.

Governance Matters After the Merger

Effective upon and after the effective time of the merger:

 

    the combined company’s name will be “The Kraft Heinz Company” and H.J. Heinz Company’s name will be changed to a name to be agreed upon between Heinz and Kraft prior to the effective time of the merger, which name must be consistent with the naming convention used for the combined company—“The Kraft Heinz Company”;

 

    Heinz and Heinz Company will each have co-corporate headquarters, one in the Chicago, Illinois metropolitan area and the other in Pittsburgh, Pennsylvania;

 

    the board of directors of The Kraft Heinz Company will be comprised of 11 members. The members of the board are expected to be:

 

    Mr. Alexandre Behring, Mr. Jorge Paulo Lemann and Mr. Marcel Herrmann Telles (each of whom was selected by 3G Capital);

 

    Mr. Gregory Abel, Mr. Warren E. Buffett and Ms. Tracy Britt Cool (each of whom was selected by Berkshire Hathaway); and

 

    Mr. John T. Cahill, Mr. L. Kevin Cox, Ms. Jeanne P. Jackson, Mr. Mackey J. McDonald and Mr. John C. Pope (each of whom was selected by Kraft);

 

    the current chief executive officer of Heinz and the chairman of the Heinz board will continue as the chief executive officer of the combined company and the chairman of the combined company board of directors, respectively, until the earlier of their resignation or removal or until their respective successors are duly elected and qualified.

 

    Mr. John T. Cahill will serve as vice chairman of the combined company board of directors.

 

    the board of directors of the combined company will have an Operations and Strategy Committee comprised of three members, including Mr. John T. Cahill (who will be the Chair of the Operations and Strategy Committee) and two members selected by Heinz, with one such member being affiliated with 3G Capital and the other with Berkshire Hathaway; and

 

    Mr. John C. Pope will serve as chair of the audit committee of the board of directors of The Kraft Heinz Company.

Employee Benefits Matters

From the completion of the merger until December 31, 2015, Heinz has agreed to provide each employee of Kraft and its subsidiaries who continues to be employed with the combined company following the completion of the merger (whom we refer to as a continuing employee) with (i) base salary or base wage, (ii) target annual cash

 

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bonus and long-term incentive opportunities, (iii) severance benefits and (iv) defined contribution retirement, pension and welfare benefits in the aggregate that, in each case, are no less favorable than the base salary or base wage, target annual cash bonus and long-term incentive opportunities, severance benefits and aggregate defined contribution retirement benefits and pension and welfare benefits provided to such continuing employee immediately prior to the effective time.

Additionally, Heinz has agreed during calendar year 2016 to provide each continuing employee with (i) base salary or base wage and target annual cash bonus opportunity that, in each case, are no less favorable than the base salary or base wage and target annual cash bonus opportunity provided to such continuing employee immediately prior to the effective time and (ii) employee benefits that are no less favorable in the aggregate than either (1) those provided by Kraft immediately prior to the completion of the merger or (2) if such continuing employee becomes eligible to participate in The Kraft Heinz Company benefit plans, those provided to similarly situated-employees of Heinz. During the period beginning on January 1, 2016 and ending on the first anniversary of the closing of the merger, Heinz has agreed to provide severance benefits to continuing employees that are no less favorable than the severance benefits provided by Kraft immediately prior to the effective time.

Heinz has also agreed to provide each Kraft employee who, as of the date of the merger agreement, was granted an opportunity to receive an annual cash performance bonus for 2015, which we refer to as a 2015 bonus, with a 2015 bonus based on individual performance goals deemed met and the achievement of corporate performance goals at the greater of target or actual performance through the completion of the merger, which we refer to as applicable performance, paid at the time bonuses are paid in the ordinary course; provided that, (i) if any employee experiences a qualifying termination on or prior to December 31, 2015, the 2015 bonus will be paid at the time of the qualifying termination based on applicable performance, pro-rated for the number of full or partial months elapsed in 2015 prior to the qualifying termination and (ii) if any employee experiences a termination of employment, other than a qualifying termination, on or prior to December 31, 2015, the 2015 bonus will be paid at the time bonuses are paid in the ordinary course based on the employee’s target bonus opportunity, pro-rated for the number of full or partial months elapsed in 2015 prior to the closing of the merger.

The parties have agreed that with respect to all plans in which Kraft employees are eligible to participate after the completion of the merger, for purposes of determining eligibility to participate, benefit accrual or vesting, each continuing employee’s service with Kraft or any of its subsidiaries will be treated as service with The Kraft Heinz Company or any of its subsidiaries; provided that such service need not be recognized to the extent that such recognition would result in any duplication of benefits for the same period of service. As of the completion of the merger, Heinz has agreed to waive any limitations, exclusions, or waiting periods under its welfare benefit plans and will give each continuing employee credit for the plan year in which the closing of the merger occurs towards applicable deductibles or out-of-pocket limits for medical expenses incurred prior to the completion of the merger.

Treatment of Kraft Stock-Based Awards

Kraft Restricted Shares

Each share of Kraft common stock that is outstanding and subject to forfeiture or other restrictions (which we refer to as a restricted share) immediately prior to the completion of the merger will, as of the completion of the merger, be converted into (i) a Kraft Heinz restricted share plus (ii) the right to receive the special dividend per share amount at the same time it is paid to holders of Kraft common stock. The Kraft Heinz restricted shares will continue to vest in accordance with the terms and conditions as were applicable to the Kraft restricted shares immediately prior to the completion of the merger.

Kraft Restricted Stock Units

Each Kraft restricted stock unit (which we refer to as an RSU) that is outstanding immediately prior to the completion of the merger will, as of the completion of the merger, be converted into (i) a Kraft Heinz RSU in respect of a number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common

 

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stock that may be issued in respect of such Kraft RSU plus (ii) the right to receive an amount in cash equal to the per share amount of the special dividend no later than 30 days following the completion of the merger. The Kraft Heinz RSUs will continue to vest and be settled in accordance with the terms and conditions as were applicable under such Kraft RSUs immediately prior to the completion of the merger.

Kraft Deferred Compensation Units

Each Kraft deferred compensation unit (which we refer to as a DCU) that is outstanding immediately prior to the completion of the merger will, as of the completion of the merger, be converted into (i) a Kraft Heinz DCU with respect to a number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock that may be issued in respect of such Kraft DCU plus (ii) the right to receive an amount in cash equal to the per share amount of the special dividend no later than 30 days following the completion of the merger. The Kraft Heinz DCUs will continue to be subject to the same terms and conditions as were applicable under such Kraft DCUs immediately prior to the completion of the merger.

Kraft Stock Options

Each Kraft stock option (whether vested or unvested) that is outstanding immediately prior to the completion of the merger will generally be adjusted such that, at the completion of the merger, it will be converted into an option to purchase the number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock subject to the Kraft stock option divided by the option adjustment ratio (rounded down to the nearest whole share), at an exercise price per share equal to the exercise price per share of each Kraft stock option immediately prior to the completion of the merger multiplied by the option adjustment ratio (rounded up to the nearest whole cent). The Kraft Heinz stock options will continue to vest and become exercisable in accordance with the terms and conditions as were applicable under such Kraft stock options immediately prior to the completion of the merger.

For purposes of the adjustment of Kraft stock options and stock appreciation rights, the option adjustment ratio is equal to the quotient determined by dividing (i) the closing price of Kraft Heinz common stock on the first trading day following the completion of the merger by (ii) the closing price of Kraft common stock on the trading day immediately prior to the trading day on which the Kraft common stock trades ex-dividend with respect to the special dividend, or, if the Kraft common stock does not ever trade ex-dividend, on the trading day immediately prior to the closing of the merger, which we refer to as the final Kraft pre-dividend price.

Kraft Stock Appreciation Right

Each Kraft stock appreciation right (whether vested or unvested) that is outstanding immediately prior to the completion of the merger will generally be adjusted such that, at the completion of the merger, it will be converted into a stock appreciation right with respect to the number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock subject to the Kraft stock appreciation right divided by the option adjustment ratio (rounded down to the nearest whole share), at a reference price per share equal to the reference price per share of each Kraft stock appreciation right immediately prior to the completion of the merger multiplied by the option adjustment ratio (rounded up to the nearest whole cent). The Kraft Heinz stock appreciation rights will continue to vest and become exercisable in accordance with the terms and conditions as were applicable under such Kraft stock appreciation rights immediately prior to the completion of the merger.

Kraft Performance Shares

Each Kraft performance share award will be converted into the right to receive an amount in cash equal to the target number of Kraft performance shares subject to such award immediately prior to the completion of the merger multiplied by the final Kraft pre-dividend price, which we refer to as the performance share amount. The performance share amount will be paid in two installments in the following manner: (i) a pro rata portion of the performance share amount with respect to each award, based on the number of full or partial months that have

 

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elapsed since the beginning of the applicable performance period to the completion of the merger, will be paid no later than 30 days following the completion of the merger and (ii) the remaining portion of the performance share amount with respect to each award will be paid on the earlier of (A) the first anniversary of the completion of the merger (subject to a continued service requirement) or (B) the holder’s qualifying termination; provided that, if the holder’s employment terminates following the completion of the merger for any reason other than due to a qualifying termination, the unpaid portion of the performance share amount will be forfeited.

Kraft Deferred Shares

Each Kraft deferred share that is outstanding immediately prior to the completion of the merger will, as of the completion of the merger, be converted into a Kraft Heinz deferred share with respect to a number of shares of Kraft Heinz common stock equal to the number of shares of Kraft common stock that may be issued in respect of such Kraft deferred share. Such Kraft Heinz deferred shares will (i) be settled in accordance with the terms and conditions as were applicable under such Kraft deferred share immediately prior to the completion of the merger and (ii) accrue additional deferred shares in respect of the special dividend, in accordance with the terms of the Kraft Stock Plan, the applicable deferred share award agreement or Kraft’s past practices with respect to such accruals.

Kraft Employee Stock Purchase Plan

The merger agreement provides that with respect to the Employee Stock Purchase Plan, which we refer to as the ESPP, (i) no offering period will commence after the offering period that commenced on April 1, 2015, (ii) no participant is entitled to begin participating in the ESPP after entry into the merger agreement, (iii) each participant’s outstanding right to purchase Kraft common stock under the ESPP will terminate on the earlier of (A) September 30, 2015 or (B) any new purchase date determined in accordance with the terms of the ESPP occurring prior to the completion of the merger; provided that (1) each participant’s accumulated payroll deduction under the ESPP will be used to purchase shares of Kraft common stock at a price determined in accordance with the terms of the ESPP and (2) Kraft will purchase all shares to be issued under the ESPP for the offering period that commenced on April 1, 2015 on the open market prior to the distribution of this proxy statement/prospectus and (iv) the ESPP will terminate prior to the completion of the merger.

Treatment of Heinz Stock-Based Awards

Heinz Stock Options

Each Heinz stock option (whether vested or unvested) that is outstanding immediately prior to the pre-closing Heinz share conversion will, as of the pre-closing Heinz share conversion, be adjusted such that following the pre-closing Heinz share conversion it represents an option to purchase (i) the number of shares of Heinz common stock equal to the number of shares of Heinz common stock subject to the Heinz stock option immediately prior to the pre-closing Heinz share conversion multiplied by the Heinz share conversion ratio (rounded down to the nearest whole share), (ii) at an exercise price per share equal to the exercise price per share of each Heinz stock option immediately prior to the pre-closing Heinz share conversion divided by the Heinz share conversion ratio (rounded up to the nearest whole cent). The Heinz stock options will continue to vest and become exercisable in accordance with the terms and conditions as were applicable under such Heinz stock options immediately prior to the pre-closing Heinz share conversion.

Heinz Restricted Stock Units

Each Heinz RSU that is outstanding immediately prior to the pre-closing Heinz share conversion will, as of the pre-closing Heinz share conversion, be adjusted such that following the pre-closing Heinz share conversion it represents an RSU with respect to the number of shares of Heinz common stock equal to the number of shares of Heinz common stock that may be issued in respect of the Heinz RSU immediately prior to the pre-closing Heinz

 

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share conversion multiplied by the Heinz share conversion ratio (rounded to the nearest whole share). The Heinz RSUs will continue to vest and be settled in accordance with the terms and conditions as were applicable under such Heinz RSUs immediately prior to the pre-closing Heinz share conversion.

Other Covenants and Agreements

The merger agreement contains certain other covenants and agreements, including covenants relating to:

 

    cooperation between Heinz and Kraft in the preparation of this proxy statement/prospectus;

 

    confidentiality and access by each party to certain information about the other party during the period prior to the effective time of the merger;

 

    the use of Heinz’s and Kraft’s reasonable best efforts to cause the merger and the subsequent merger to be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Code;

 

    Kraft will give Heinz the opportunity to participate in the defense or settlement of any shareholder litigation against Kraft or its directors relating to the merger;

 

    causing any dispositions of Kraft common stock and any acquisitions of Heinz common stock, in each case resulting from the merger and the other transactions contemplated by the merger agreement by each individual who will or may become subject to reporting requirements under the securities laws to be exempt under Rule 16b-3 promulgated under the Exchange Act;

 

    the use of each party’s reasonable best efforts to cooperate in connection with the refinancing on the closing date of the Kraft 1.625% notes, the Kraft debentures and all amounts outstanding, if any, under the Kraft revolving credit facility; and

 

    cooperation between Heinz and Kraft in connection with public announcements.

Heinz has also agreed to obtain the equity investment on the terms and conditions described in the equity investment letters.

Heinz has also agreed to indemnify and hold harmless, to the fullest extent that would have been permitted under the laws applicable to Kraft prior to the effective time of the merger, and to advance expenses as incurred to the fullest extent permitted under the laws applicable to Kraft prior to the effective time of the merger, each current or former director or officer of Kraft or any of its subsidiaries against any costs or expenses (including reasonable attorneys’ fees), judgments, settlements, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to matters existing or occurring at or prior to the effective time of the merger, including the merger and the other transactions contemplated by the merger agreement.

Kraft may (or, if Kraft fails to do so, Heinz will cause H.J. Heinz Company to), prior to the effective time of the merger, obtain and fully pay the premium for “tail” insurance policies with a claims reporting or discovery period of six years from and after the effective time of the merger, with respect to directors’ and officers’ liability insurance and fiduciary liability insurance with benefits terms, conditions, retentions and limits of liability at least as favorable Kraft’s existing policies with respect to matters existing at or occurring prior to the effective time, subject to certain limitations.

Conditions to Completion of the Merger

The obligations of Heinz, merger sub I, merger sub II and Kraft to effect the merger are subject to the satisfaction or waiver by each of the parties to the merger agreement of the following conditions at or prior to the effective time:

 

    approval of the merger proposal by the affirmative vote of holders of a majority of the outstanding shares of Kraft common stock entitled to vote at the special meeting;

 

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    authorization for the listing on the NASDAQ or NYSE of the shares of Kraft Heinz common stock to be issued to Kraft shareholders in the merger, subject to official notice of issuance;

 

    the waiting period applicable to the consummation of the merger under the HSR Act having expired or been earlier terminated;

 

    Heinz’s receipt of approval of an ARC pursuant to Section 102 of the Competition Act (Canada) or the applicable waiting period under the Canadian Competition Act having expired, been terminated or waived and Heinz’s receipt of a no action letter;

 

    obtaining certain other foreign regulatory approvals (if required);

 

    effectiveness of the registration statement of which this proxy statement/prospectus forms a part and no stop order suspending the effectiveness of the registration statement having been issued or proceedings for that purpose having been initiated or threatened by the SEC; and

 

    no material order, injunction or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the merger or any of the other transactions contemplated by the merger agreement being in effect.

In addition, Heinz’s obligation to effect the merger is subject to the satisfaction or waiver of the following conditions at or prior to the effective time:

 

    the representations and warranties of Kraft being true and correct on the date of the merger agreement and the closing date of the merger, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein), individually or in the aggregate, has not had, and would not reasonably be expected to have, a material adverse effect on Kraft, other than the representations and warranties referred to in the three paragraphs immediately following this paragraph;

 

    the representations and warranties of Kraft related to (i) due corporate organization, valid existence and good standing of Kraft under Virginia law, (ii) capitalization of Kraft and (iii) no bonds, debentures, notes or other indebtedness, or securities convertible into or exchangeable for, or other rights to acquire, any such bonds, debentures, notes or other indebtedness, of Kraft having the right to vote on any matters on which shareholders may vote, in each case being true and correct in all material respects (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein) on the date of the merger agreement and as of the closing date of the merger, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such date);

 

    the representations and warranties of Kraft related to (i) the execution and delivery of the merger agreement by Kraft and the consummation by Kraft of the merger and the other transactions contemplated by the merger agreement not violating, conflicting with or resulting in a breach of any provision of or causing the loss of any benefit under, constituting a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, resulting in the termination of or a right of termination or cancelation under, accelerating the performance required by, or resulting in the creation of any lien upon any of the respective properties or assets of Kraft or any of the Kraft subsidiaries under, any of the terms, conditions or provisions of any contract, note, bond, mortgage, indenture, deed of trust, Kraft license, lease, agreement or other instrument or obligation to which Kraft or any of the Kraft subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected and (ii) the right of Kraft and its subsidiaries, collectively, to use, free and clear of all liens, all intellectual property rights used in the operation of their respective businesses as currently conducted not being affected by the execution, delivery and performance of the merger agreement or the consummation of the merger and the other transactions contemplated by the merger agreement, in each case being true and correct on the date of the merger agreement and as of the closing date of the merger as if made at and as of such date;

 

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    the representations and warranties of Kraft related to the non-occurrence of any event or events or development having, or that would reasonably be expected to have, individually or in the aggregate a material adverse effect on Kraft since December 27, 2014, being true and correct as of the date of the merger agreement;

 

    the receipt by Heinz of a certificate executed by Kraft’s chief executive officer or chief financial officer to the effects of the immediately foregoing four paragraphs;

 

    Kraft having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger, together with the receipt by Heinz of a certificate executed by Kraft’s chief executive officer or chief financial officer to such effect;

 

    receipt by Heinz of a tax opinion from Cravath, Swaine & Moore LLP, tax counsel to Heinz, on the basis of certain facts, representations and assumptions set forth in such opinion, dated as of the date of the registration statement of which this proxy statement/prospectus forms a part and as of the closing date of the merger to the effect that the merger and the subsequent merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Heinz and Kraft each will be a party to the reorganization within the meaning of Section 368(b) of the Code; and

 

    since the date of the merger agreement, no event or events or development or developments having occurred that had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Kraft.

In addition, Kraft’s obligation to effect the merger is subject to the satisfaction or waiver of the following conditions at or prior to the effective time:

 

    the representations and warranties of Heinz being true and correct on the date of the merger agreement and the closing date of the merger, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein), individually or in the aggregate, has not had, and would not reasonably be expected to have, a material adverse effect on Heinz, other than the representations and warranties referred to in the three paragraphs immediately following this paragraph;

 

    the representations and warranties of Heinz related to (i) due corporate organization, valid existence and good standing of Heinz under Delaware law, (ii) capitalization of Heinz, (iii) no bonds, debentures, notes or other indebtedness, or securities convertible into or exchangeable for, or other rights to acquire, any such bonds, debentures, notes or other indebtedness, of Heinz having the right to vote on any matters on which shareholders may vote and (iv) absence of operating and business activities and liabilities of Heinz, individually, and Hawk Intermediate I, individually, in each case being true and correct in all material respects (without giving effect to any limitation as to “materiality” or “material adverse effect” set forth therein) on the date of the merger agreement and as of the closing date of the merger, as if made at and as of such date (except to the extent expressly made as of an earlier date, in which case as of such date);

 

   

the representations and warranties of Heinz related to (i) the execution and delivery of the merger agreement by Heinz and the consummation by Heinz of the merger and the other transactions contemplated by the merger agreement not violating, conflicting with or resulting in a breach of any provision of or causing the loss of any benefit under, constituting a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, resulting in the termination of or a right of termination or cancelation under, accelerating the performance required by, or resulting in the creation of any lien upon any of the respective properties or assets of Heinz or any of the Heinz subsidiaries under, any of the terms, conditions or provisions of any contract, note, bond, mortgage, indenture, deed of trust, Heinz license, lease, agreement or other instrument or obligation to which

 

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Heinz or any of the Heinz subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected and (ii) the right of Heinz and its subsidiaries, collectively, to use, free and clear of all liens, all intellectual property rights used in the operation of their respective businesses as currently conducted not being affected by the execution, delivery and performance of the merger agreement or the consummation of the merger and the other transactions contemplated by the merger agreement, in each case being true and correct on the date of the merger agreement and as of the closing date of the merger as if made at and as of such date;

 

    the representations and warranties of Heinz related to the non-occurrence of any event or events or development or developments having, or that would reasonably be expected to have, individually or in the aggregate a material adverse effect on Heinz since December 28, 2014, being true and correct as of the date of the merger agreement;

 

    the receipt by Kraft of a certificate executed by Heinz’s chief executive officer or chief financial officer to the effects of the immediately foregoing four paragraphs;

 

    Heinz having performed in all material respects all obligations required to be performed by it under the merger agreement at or prior to the closing date of the merger, together with the receipt by Kraft of a certificate executed by Heinz’s chief executive officer or chief financial officer to such effect;

 

    receipt by Kraft of a tax opinion from Sullivan & Cromwell LLP, tax counsel to Kraft, on the basis of certain facts, representations and assumptions set forth in such opinion, dated as of the date of the registration statement of which this proxy statement/prospectus forms a part and as of the closing date of the merger, to the effect that the merger and the subsequent merger will be treated as a single integrated transaction that will qualify as a “reorganization” within the meaning of Section 368(a) of the Code and that Heinz and Kraft each will be a party to the reorganization within the meaning of Section 368(b) of the Code;

 

    since the date of the merger agreement, no event or events or development or developments having occurred that had, or would reasonably be expected to have, individually or in the aggregate, a material adverse effect on Heinz; and

 

    Heinz having obtained the equity investment at or prior to the closing date of the merger on the terms and conditions described in the equity investment letters.

Termination of the Merger Agreement

The merger agreement may be terminated at any time prior to the effective time of the merger, whether before or after the receipt of the approval of the Kraft shareholders of the merger proposal at the special meeting, by action taken or authorized by the board of directors of the terminating party or parties under the following circumstances:

 

    by mutual written consent of Heinz and Kraft;

 

    by either Heinz or Kraft:

 

    if any governmental entity issues a final and nonappealable order permanently enjoining or otherwise prohibiting the consummation of the merger or the other transactions contemplated by the merger agreement, except that no party may terminate the merger agreement if such party’s breach of its obligations proximately contributed to the issuance of such order;

 

    if the Kraft shareholders fail to approve the merger proposal at the special meeting or any adjournment or postponement thereof at which the vote was taken; or

 

    if the merger is not consummated by March 31, 2016, which we refer to as the end date, provided, that no party may terminate the merger agreement if such party’s breach of its obligations proximately contributed to the failure to close by the end date;

 

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    by Heinz if there shall have been a breach of any of the covenants or agreements or any inaccuracy of any of the representations or warranties of Kraft, in either case such that the conditions to Heinz’s obligations to complete the merger relating to such covenants or representations or warranties would not then be satisfied and such breach or inaccuracy is incapable of being cured, or is not cured, by Kraft by the end date or, if capable of being cured by the end date, Kraft has not commenced good faith efforts to cure the breach or inaccuracy within 10 days following receipt of written notice from Heinz and thereafter is not continuing such good faith efforts;

 

    by Kraft if there shall have been a breach of any of the covenants or agreements or any inaccuracy of any of the representations or warranties of Heinz, in either case such that the conditions to Kraft’s obligations to complete the merger relating to such covenants or representations or warranties would not then be satisfied and such breach or inaccuracy is incapable of being cured, or is not cured, by Heinz by the end date or, if capable of being cured by the end date, Heinz has not commenced good faith efforts to cure the breach or inaccuracy within 10 days following receipt of written notice from Heinz and thereafter is not continuing such good faith efforts.

In addition, the merger agreement may be terminated:

 

    by Heinz if, prior to obtaining the approval of the Kraft shareholders of the merger proposal at the special meeting, there has been an adverse recommendation change by the Kraft board; or

 

    by Kraft at any time prior to obtaining the approval of the Kraft shareholders of the merger proposal at the special meeting in connection with entering into an acquisition agreement with a third party in accordance with the non-solicitation provisions of the merger agreement, provided that Kraft pays Heinz the termination fee of $1.2 billion prior to or substantially concurrently with entering into such acquisition agreement.

If the merger agreement is validly terminated, the merger agreement will become void and have no effect, without any liability or obligation on the part of any party, except as expressly set forth therein (including any obligation of Kraft to pay the termination fee or the expense fee, as described in the paragraph below), unless a party is in willful and material breach of any representation, warranty, covenant or agreement set forth in the merger agreement.

Expenses and Termination Fees; Liability for Breach

Each party will pay all fees and expenses incurred by it in connection with the merger and the other transactions contemplated by the merger agreement. However, Heinz and Kraft will share equally all fees and expenses in relation to the printing and filing of the registration statement of which this proxy statement/prospectus forms a part and the printing, filing and distribution of this proxy statement/prospectus.

Kraft will be obligated to pay a termination fee of $1.2 billion (less the fee paid by Kraft for Heinz expenses, if any) to Heinz if:

 

   

(a) a bona fide takeover proposal is made directly to Kraft’s shareholders or any person has publicly announced a takeover proposal or any takeover proposal otherwise becomes publicly known after the date of the merger agreement and prior to the special meeting and thereafter, (b) the merger agreement is terminated (i) by either Heinz or Kraft following the failure of Kraft shareholders to approve the merger proposal at the special meeting or any adjournment or postponement thereof at which the vote was taken or the failure to consummate the merger on or before the end date, or (ii) by Heinz for a breach of any of the covenants or agreements or any inaccuracy of any of the representations or warranties set forth in the merger agreement on the part of Kraft, which breach or inaccuracy, either individually or in the aggregate, would result in failure of the conditions of Heinz to consummate the merger relating to such covenants or representation or warranties and (c) Kraft enters into a definitive

 

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agreement with respect to a transaction contemplated by a takeover proposal or consummates a takeover proposal within 12 months of the date the merger agreement is terminated (for purposes of this clause (c), each reference in the definition of “takeover proposal” to “20% or more” being deemed to be “more than 35%”, in the event the definitive agreement or transaction in respect of such takeover proposal is entered into or consummated, as applicable, with the same person (or any of its affiliates) that made or announced the takeover proposal that is referenced in clause (a) of this paragraph or “more than 50%”, if otherwise) (in which case Kraft must pay the termination fee substantially concurrently with or prior to the earlier of the entering into of the definitive agreement or the consummation of the transaction referred to in clause (c));

 

    Kraft terminates the merger agreement at any time prior to obtaining the approval of the Kraft shareholders in connection with entering into an acquisition agreement with a third party (in which case Kraft must pay the termination fee substantially concurrently with or prior to its termination of the merger agreement); or

 

    Heinz terminates the merger agreement because, prior to obtaining the approval of the Kraft shareholders, the Kraft board of any committee thereof makes an adverse recommendation change (except where such adverse recommendation change was made as a result of a material adverse effect on Heinz and no takeover proposal had been then received by Kraft or any of its subsidiaries prior to the date of the adverse recommendation change) (in which case Kraft must pay the termination fee within two business days after its termination of the merger agreement).

In the event that the merger agreement is terminated by Heinz because of the failure of Kraft shareholders to approve the merger proposal at the special meeting or any adjournment or postponement thereof at which the vote was taken, Kraft will be obligated to pay Heinz the reasonable and documented out-of-pocket fees and expenses incurred by Heinz, merger sub I and merger sub II, or on their behalf, in connection with the authorization, preparation, negotiation, execution and performance of the merger agreement, any filings or submissions made under antitrust or other laws, and any other matters related to the merger and the transactions contemplated by the merger agreement, up to a maximum amount of $15 million.

If Kraft fails to promptly pay any termination fees or reimburse any expenses when due and Heinz obtains a judgment against Kraft for that amount, Kraft has agreed to pay interest on the amount due (at a rate equal to three-month LIBOR plus 250 basis points).

Heinz’s receipt of the termination fee will be its sole and exclusive remedy for monetary damages under the merger agreement. Kraft will not be required to pay the termination fee or the expense fee, as applicable, on more than one occasion.

Amendments, Extensions and Waivers

The merger agreement may be amended by the parties, by action taken or authorized by their respective boards of directors, at any time before or after the approval of the merger proposal by the affirmative vote of holders of a majority of the outstanding shares of Kraft common stock entitled to vote at the special meeting. However, after such Kraft shareholder approval, any amendment of the merger agreement that requires further approval of the Kraft shareholders pursuant to applicable law will be effective only with the approval of such shareholders.

At any time prior to the effective time of the merger, Kraft, in the case of Heinz, merger sub I and merger sub II, and Heinz, in the case of Kraft, may (i) extend the time for performance of any obligations or other acts of such parties, (ii) waive any inaccuracies in the representations and warranties of such parties contained in the merger agreement and (iii) waive compliance by such parties with any of the agreements or conditions contained in the merger agreement.

 

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No Third Party Beneficiaries

The merger agreement is not intended to, and does not, confer upon any person other than Heinz, Kraft, merger sub I and merger sub II any rights or remedies, except in connection with Heinz’ agreement, after the effective time, to indemnify and hold harmless, and to advance expenses to, each current or former director or officer of Kraft or any of its subsidiaries in connection with claims arising out of or pertaining to matters existing or occurring at or prior to the effective time of the merge and to obtain and fully pay the premium for “tail” insurance with respect to directors’ and officers’ liability insurance and fiduciary liability insurance and in connection with the payment of the merger consideration and the special dividend after the effective time of the merger, in each case as set forth in the merger agreement.

Specific Performance

Heinz and Kraft acknowledged and agreed in the merger agreement that irreparable damage would occur in the event that any of the provisions of the merger agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy. Therefore, the parties fully intend for specific performance to be an available remedy for breaches of the merger agreement. In addition, the parties agreed that they will be entitled to seek an injunction or injunctions to prevent breaches of the merger agreement and to enforce specifically the performance of terms and provisions of the merger agreement without proof of actual damages in addition to any other remedy to which they are entitled at law or in equity. The parties further agreed not to assert that a remedy of specific performance is unenforceable, invalid, contrary to law or inequitable for any reason, nor to object to a remedy of specific performance on the basis that a remedy of monetary damages would provide an adequate remedy for any such breach. Each party further acknowledged and agreed that such agreements relating to specific performance are an integral part of the transactions contemplated by the merger agreement and that, without these agreements, the other party would not have entered into the merger agreement. Each party further agreed that no other party or any other person will be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition to obtaining any remedy relating to specific performance, and each party irrevocably waived any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument. Notwithstanding the foregoing, Heinz and Kraft acknowledged and agreed that the right of Kraft to seek an injunction or specific performance in connection with enforcing Heinz’s obligation to enforce its rights under or with respect to the equity investment letters is subject to the requirements that (i) all conditions to the obligations of Heinz to effect the merger are satisfied (other than those conditions that by their terms are to be satisfied by actions taken at closing) at the time when the closing is required to occur pursuant to the merger agreement, and (ii) Kraft has irrevocably confirmed that if the equity investment is funded, then it would take such actions that are within its control to cause the closing to occur substantially concurrently with such funding.

 

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OTHER RELATED AGREEMENTS

Registration Rights Agreement

The following is a summary of the material provisions of the registration rights agreement to be entered into by The Kraft Heinz Company, 3G Global Food Holdings and Berkshire Hathaway, and is qualified in its entirety by reference to the full text of the form of such registration rights agreement attached as Annex E to this proxy statement/prospectus and incorporated by reference into this proxy statement/prospectus.

In connection with the merger and the transactions contemplated by the merger agreement, The Kraft Heinz Company will enter into a registration rights agreement with 3G Global Food Holdings and Berkshire Hathaway. Pursuant to the registration rights agreement, The Kraft Heinz Company will grant 3G Global Food Holdings and Berkshire Hathaway registration rights with respect to the shares of Kraft Heinz common stock held by 3G Global Food Holdings and Berkshire Hathaway as of the date of the closing of the merger, representing (i) shares of Kraft Heinz common stock acquired from Heinz in connection with the merger and the transactions contemplated by the merger agreement and (ii) shares of Kraft Heinz common stock issuable upon the exercise of the Berkshire warrant (we refer to (i) and (ii) together as registrable shares). The registration rights only apply to registrable shares and not shares of Kraft Heinz common stock subsequently acquired by either party. These rights will include demand registration rights, shelf registration rights and “piggyback” registration rights, as well as customary indemnification. The rights are subject to certain holdback and suspension periods. All fees, costs and expenses related to registrations generally will be borne by The Kraft Heinz Company, other than underwriting discounts and commissions attributable to the sale of shares of Kraft Heinz common stock by 3G Global Food Holdings and Berkshire Hathaway, as applicable.

Demand Registration Rights. The registration rights agreement will grant each of 3G Global Food Holdings and Berkshire Hathaway demand registration rights. The Kraft Heinz Company will be required, upon the written request of 3G Global Food Holdings or Berkshire Hathaway, to file a registration statement pursuant to its demand rights under the registration rights agreement as promptly as practicable and to use its reasonable best efforts to effect registration of shares of Kraft Heinz common stock requested to be registered by 3G Global Food Holdings or Berkshire Hathaway, subject to certain exceptions. Each of 3G Global Food Holdings and Berkshire Hathaway will be entitled to request up to three demand registrations in the aggregate.

Shelf Registration Rights. The registration rights agreement will grant each of 3G Global Food Holdings and Berkshire Hathaway shelf registration rights. Subject to The Kraft Heinz Company’s eligibility to use Form S-3, each of 3G Global Food Holdings and Berkshire Hathaway will be entitled to request that The Kraft Heinz Company file a shelf registration statement with respect to some or all of its shares of Kraft Heinz common stock, and, upon such request, The Kraft Heinz Company is required to file such registration statement promptly as practicable, subject to certain exceptions.

“Piggyback” Registration Rights. The registration rights agreement will grant each of 3G Global Food Holdings and Berkshire Hathaway “piggyback” registration rights. If The Kraft Heinz Company registers any of its shares of common stock, either for its own account or for the account of other shareholders, each of 3G Global Food Holdings and Berkshire Hathaway will be entitled, subject to certain exceptions, to include its shares of common stock in the registration.

Holdback Periods. Notwithstanding the registration rights described above, if there is an offering of shares of The Kraft Heinz Company and the managing underwriters for the offering advise The Kraft Heinz Company that a public sale or distribution of shares outside the offering would adversely affect the offering, then, if requested, each of 3G Global Food Holdings and Berkshire Hathaway will not dispose of, or request the registration of, any registrable shares for a certain period, which we refer to as a holdback period. Such holdback period will begin on the 10th day before the pricing date of the offering and extend for either (i) 120 days or (ii) an earlier date, if designated by the managing underwriters.

 

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Suspension Periods. In addition, The Kraft Heinz Company may delay or suspend the filing, effectiveness or use of a registration statement for a certain period, which we refer to as a suspension period, if The Kraft Heinz Company determines that (i) proceeding with the use or effectiveness of the registration statement would require it to disclose material non-public information and the disclosure of that information at that time would not be in The Kraft Heinz Company’s best interests or (ii) the registration or offering to be delayed or suspended would, if not delayed or suspended, materially adversely affect The Kraft Heinz Company or delay or otherwise materially adversely affect the success of any pending or proposed material transaction, including any debt or equity financing, any acquisition or disposition, any recapitalization or reorganization or any other material transaction, whether due to commercial reasons, a desire to avoid premature disclosure of information or any other reason. During any calendar year, there will not be more than two suspension periods and the aggregate number of days included in all suspension periods in such year will not exceed 119 days.

Shareholders’ Agreement

The following is a summary of the material provisions of the shareholders’ agreement to be entered into by 3G Global Food Holdings and Berkshire Hathaway.

Following the merger, 3G Global Food Holdings and Berkshire Hathaway will enter into a shareholders’ agreement that will govern how each party and their affiliates will vote the shares of Kraft Heinz common stock held by them as of the date of closing of the merger, with respect to supporting certain directors that are designated by either 3G Global Food Holdings or Berkshire Hathaway. Pursuant to the shareholders’ agreement, 3G Global Food Holdings will agree that for so long as Berkshire Hathaway and its affiliates control shares representing at least 66% of the voting power in election of directors of shares owned by Berkshire Hathaway as of the consummation of the merger, 3G Global Food Holdings and its affiliates will vote their shares of Kraft Heinz common stock in favor of the three Kraft Heinz board nominees designated by Berkshire Hathaway and not take any action to remove such designees without Berkshire Hathaway’s consent. Similarly, Berkshire Hathaway will agree that for so long as 3G Global Food Holdings and its affiliates control shares representing at least 66% of the voting power in elections of directors of shares owned by 3G Global Food Holdings as of the consummation of the merger, Berkshire Hathaway and its affiliates will vote their shares of Kraft Heinz common stock in favor of the three Kraft Heinz board nominees designated by 3G Global Food Holdings and not take any action to remove such designees without 3G Global Food Holdings’ consent. The shareholders’ agreement will provide that each party’s foregoing rights and obligations will step down upon specified reductions in ownership below the 66% threshold described above by either 3G Global Food Holdings or Berkshire Hathaway and their respective affiliates, as applicable.

Warrant

In connection with the 2013 Merger and the transactions contemplated thereby, Berkshire Hathaway was granted a warrant to purchase 46,195,652 shares of Heinz common stock at an exercise price of $0.01 per share. The number of shares of Heinz common stock underlying the warrant will be adjusted pursuant to the pre-closing Heinz share conversion. Following the Heinz share conversion, the warrant will entitle Berkshire Hathaway to purchase 20,480,013.85 shares of Kraft Heinz common stock. References to “fully diluted” in this proxy statement/prospectus, when used in reference to the total ownership of the combined company of 51% or 49%, as applicable, means fully diluted based on the treasury stock method, including all shares issuable in connection with the exercise of the warrant held by Berkshire Hathaway.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF KRAFT

The following table presents selected consolidated financial data for Kraft and its subsidiaries for the three months ended March 28, 2015 and March 29, 2014 and for each of the five fiscal years 2010 through 2014. All amounts are in millions except per share data.

The information set forth below is not necessarily indicative of future results and should be read together with the information provided in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of, and the consolidated financial statements of Kraft and notes thereto included in, Kraft’s Annual Report on Form 10-K for the fiscal year ended December 27, 2014 and Kraft’s Quarterly Report on Form 10-Q for the three months ended March 28, 2015.

 

    Three Months Ended:     Year Ended:  
    March 28,
2015
    March 29,
2014
    December 27,
2014
    December 28,
2013
    December 29,
2012(1)
    December 31,
2011(1)
    December 31,
2010(1)
 

Net revenues

  $ 4,352      $ 4,362      $ 18,205      $ 18,218      $ 18,271      $ 18,576      $ 17,739   

Interest and other expense, net

    107        116        484        501        258        7        6   

Earnings from continuing operations

    429        513        1,043        2,715        1,642        1,775        1,890   

Earnings and gain from discontinued operations, net of income taxes

    —          —          —          —          —          —          1,644   

Net earnings

  $ 429      $ 513      $ 1,043      $ 2,715      $ 1,642      $ 1,775      $ 3,534   

Earnings from continuing operations per share(2):

             

Basic

  $ 0.73      $ 0.86      $ 1.75      $ 4.55      $ 2.77      $ 3.00      $ 3.20   

Diluted

  $ 0.72      $ 0.85      $ 1.74      $ 4.51      $ 2.75      $ 3.00      $ 3.20   

Net cash provided by operating activities

  $ 334      $ 251      $ 2,020      $ 2,043      $ 3,035      $ 2,664      $ 828   

Capital expenditures

    139        76        535        557        440        401        448   

Depreciation and amortization

    102        96        385        393        428        364        354   

As of:

             

Total assets

    23,134        23,361        22,947        23,148        23,179        21,389        21,448   

Current portion of long-term debt

    1,406        5        1,405        4        5        8        8   

Long-term debt(3)

    8,626        9,998        8,627        9,976        9,966        27        31   

Total equity

    4,517        5,307        4,365        5,187        3,572        16,588        17,037   

Dividends declared per share

  $ 0.55      $ 0.53      $ 2.15      $ 2.05      $ 0.50        —          —     

 

(1) Prior to October 1, 2012, Kraft was a part of Mondelēz International, Inc., which we refer to as Mondelēz International. On October 1, 2012, Mondelēz International spun-off Kraft as an independent public company through a spin-off of its North American grocery business to Mondelēz International’s shareholders, which we refer to as the spin-off. Prior to the spin-off, Kraft’s financial statements were prepared on a stand-alone basis and were derived from the consolidated financial statements and accounting records of Mondelēz International. Kraft’s financial statements for the years ended December 29, 2012, December 31, 2011 and December 31, 2010 included certain expenses of Mondelēz International that were allocated to Kraft. These allocations were not necessarily indicative of the actual expenses Kraft would have incurred as an independent public company or of the costs Kraft will incur in the future, and may differ substantially from the allocations Kraft agreed to in the various separation agreements.

 

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(2) On October 1, 2012, Mondelēz International distributed 592 million shares of Kraft common stock to Mondelēz International’s shareholders. Basic and diluted earnings per common share and the average number of common shares outstanding were retrospectively restated for the years ended December 31, 2011 and December 31, 2010 for the number of Kraft shares outstanding immediately following the spin-off.
(3) Excludes current portion of long-term debt.

 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF HEINZ

The following table presents selected consolidated financial data for H. J. Heinz Company and its subsidiaries for each of the four fiscal years 2010 through 2013, and for the period from April 29 to June 7, 2013, which we refer to collectively as the Predecessor periods, and for Heinz for each of the periods from February 8 to December 29, 2013 (which includes the results of H. J. Heinz Company from June 8, 2013 to December 29, 2013), the year ended December 28, 2014 and for the quarters ended March 30, 2014 and March 29, 2015, which we refer to collectively as the Successor periods. All amounts are in millions except per share data. On October 21, 2013, Heinz’s board of directors approved a change in Heinz’s fiscal year end from the Sunday closest to April 30 to the Sunday closest to December 31. As a result of this change, the consolidated financial statements include presentation of the Successor period from February 8, 2013 through December 29, 2013 and the Predecessor period from April 29, 2013 through June 7, 2013. We refer to these together as the Transition period.

The statement of operations data for the quarters ended March 29, 2015 and March 30, 2014 and the balance sheet data as of March 29, 2015 have been derived from Heinz’s unaudited consolidated financial statements, beginning on page [] of this proxy statement/prospectus. The unaudited consolidated financial statements have been prepared on the same basis as Heinz’s audited consolidated financial statements, and in the opinion of Heinz’s management, reflect all adjustments, including normal recurring adjustments, necessary for a fair presentation of the results for those periods. The results for any interim period are not necessarily indicative of the results that may be expected for a full year. The statement of operations data for the fiscal years ended December 28, 2014, April 28, 2013 and April 29, 2012 and the balance sheet data as of December 28, 2014 and April 28, 2013 have been obtained from Heinz’s audited consolidated financial statements, beginning on page [] of this proxy statement/prospectus. The statement of operations data for the fiscal years ended April 27, 2011 and April 28, 2010 and the balance sheet data as of April 29, 2012, April 27, 2011 and April 28, 2010 have been derived from Heinz’s audited consolidated financial statements for such years, not included or incorporated by reference into this proxy statement/prospectus.

 

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The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in the section entitled “Management’s Discussion and Analysis of the Financial Condition and Results of Operations of H.J. Heinz Holding Corporation” beginning on page [] of this proxy statement/prospectus and with Heinz’s consolidated financial statements and notes thereto beginning on page [] of this proxy statement/prospectus.

 

    Successor     Predecessor  
(in millions)   March 29,
2015
(13 Weeks)
    March 30,
2014
(13 Weeks)
    December 28,
2014
(52 Weeks)
    February 8-
December 29,
2013
(29 Weeks)(3)
    April 29-
June 7,
2013
(6 Weeks)
    April 28,
2013
(52 Weeks)
    April 29,
2012 (52
1/2
Weeks)
    April 27,
2011
(52 Weeks)
    April 28,
2010
(52 Weeks)
 

Sales(1)

  $ 2,478      $ 2,800      $ 10,922      $ 6,240      $ 1,113      $ 11,529      $ 11,508      $ 10,559      $ 10,324   

Interest expense(1)

    201        169        686        409        35        284        293        273        294   

(Loss)/income from continuing operations(1)

    276        195        672        (66     (191     1,102        992        1,046        963   

Loss from discontinued operations, net of tax

    —          —          —          (6     (1     (75     (51     (40     (81

Net income/(loss)(1)

    276        195        672        (72     (192     1,027        941        1,006        882   

Earnings from continuing operations, per share

                   

Basic

  $ 0.11      $ 0.02      $ (0.07   $ (1.32   $ (0.60   $ 3.39      $ 3.03      $ 3.21      $ 2.99   

Diluted

  $ 0.11      $ 0.02      $ (0.07   $ (1.32   $ (0.60   $ 3.37      $ 3.01      $ 3.18      $ 2.96   

Cash provided by/(used for) operating activities

  $ (83   $ 302      $ 2,140      $ 35      $ (373   $ 1,390      $ 1,494      $ 1,584      $ 1,262   

Capital expenditures

    (53     (62     (399     (202     (120     (399     (419     (336     (278

Depreciation

    65        147        430        231        36        302        296        255        255   

Amortization

    25        24        100        49        4        42        43        40        44   

Amortization of deferred debt issuance costs

    10        12        45        29        1        5        4        4        4   

Total assets

    36,293        38,962        36,763        38,972        NA        12,940        11,983        12,231        10,076   

Short-term debt and current portion of long-term debt

    11        238        70        252        NA        2,160        247        1,535        59   

Long-term debt, exclusive of current portion(2)

    13,616        14,593        13,586        14,618        NA        3,848        4,780        3,078        4,559   

Redeemable preferred stock

    8,320        8,320        8,320        8,320        —          —          —          —          —     

Total Equity

    7,021        8,150        7,336        8,192        NA        2,850        2,811        3,182        1,948   

Cash dividends per share

  $ —        $ —        $ —        $ —        $ —        $ 2.06      $ 1.92      $ 1.80      $ 1.68   

 

(1) Amounts exclude the operating results as well as any associated impairment charges and losses on sale related to Heinz’s Shanghai LongFong Foods business in China and U.S. Foodservice frozen desserts business, which were divested in Fiscal 2013, as well as the private label frozen desserts business in the U.K. and the Kabobs and Appetizers And, Inc. businesses in the U.S., which were divested in Fiscal 2010, all of which have been presented as discontinued operations.
(2) Long-term debt, exclusive of current portion, includes $122.5 million, $128.4 million, $150.5 million, and $207.1 million of hedge accounting adjustments associated with interest rate swaps at April 28, 2013, April 29, 2012, April 27, 2011, and April 28, 2010, respectively. There were no interest rate swaps requiring such hedge accounting adjustments at March 29, 2015, March 30, 2014, December 28, 2014 or December 29, 2013.
(3) Refers to the weeks of operating activity included in the period. The activity in the Successor period February 8, 2013 to June 7, 2013 related primarily to the issuance of the Exchange Notes and recognition of associated issuance costs and interest expense.

 

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The results for the three months ended March 29, 2015 include the following special items:

Heinz incurred Kraft Merger related costs of $7.1 million consisting primarily of legal and professional fees.

Heinz is investing in restructuring and productivity initiatives as part of its ongoing cost reduction efforts with the goal of driving efficiencies and creating fiscal resources that will be reinvested into Heinz’s business as well as to accelerate overall productivity on a global scale. Heinz recorded pretax costs related to these initiatives of $17 million in the three months ended March 29, 2015. See Note 4, “Restructuring and Productivity Initiatives” in the section entitled “Notes to Condensed Consolidated Financial Statements (unaudited)” beginning on page [] of this proxy statement/prospectus for further explanation.

Heinz recorded pretax costs related to these initiatives of $141 million in the three months ended March 30, 2014. See Note 4, “Restructuring and Productivity Initiatives” in the section entitled “Notes to Condensed Consolidated Financial Statements (unaudited)” beginning on page [] of this proxy statement/prospectus for further explanation.

The results for the year ended December 28, 2014 include the following special items:

In connection with its investment in restructuring and productivity initiatives described above, Heinz recorded pretax costs related to these initiatives of $435.4 million in the Successor period ended December 28, 2014. See Note 8, “Restructuring and Productivity Initiatives” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

The results of the Successor period from February 8, 2013 to December 29, 2013 include the following special items:

Heinz incurred 2013 Merger related costs of $157.9 million consisting primarily of advisory fees, legal, accounting and other professional costs, as well as severance and compensation arrangements pursuant to existing agreements with certain former executives and employees in connection with the 2013 Merger. See Note 4, “2013 Merger and Acquisition” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

In connection with its investment in restructuring and productivity initiatives described above, Heinz recorded pretax costs related to these initiatives of $410.4 million in the Successor period ended December 29, 2013. See Note 8, “Restructuring and Productivity Initiatives” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

The results of the Predecessor period from April 29, 2013 to June 7, 2013 include the following special items:

Prior to consummation of the 2013 Merger, Heinz incurred 2013 Merger related costs of $112.2 million resulting from the acceleration of expense for stock options, RSUs and other compensation plans pursuant to the existing change in control provisions of those plans. Heinz also recorded a loss from the extinguishment of debt of $129.4 million for debt required to be repaid upon closing as a result of the change in control. See Note 4, “2013 Merger and Acquisition” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

Fiscal 2013 results include the following special items:

Prior to the consummation of the 2013 Merger, Heinz incurred $44.8 million pretax of transaction-related costs, including legal, accounting and other professional fees, during the fourth quarter of Fiscal 2013. See Note 4, “2013 Merger and Acquisition” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

 

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On February 8, 2013, the Venezuelan government announced the devaluation of its currency relative to the U.S. dollar, changing the official exchange rate from BsF 4.30 to BsF 6.30 per U.S. dollar, resulting in a $42.7 million pretax currency translation loss during the fourth quarter of Fiscal 2013. See Note 21, “Venezuela - Foreign Currency and Inflation” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation.

Fiscal 2012 results from continuing operations include expenses of $205.4 million pretax for productivity initiatives. See Note 8, “Restructuring and Productivity Initiatives” in the section entitled “Notes to Consolidated Financial Statements (audited)” beginning on page [] of this proxy statement/prospectus for further explanation of these initiatives.

Fiscal 2010 results from continuing operations include expenses of $35.9 million pretax for upfront productivity charges and a gain of $15.0 million pretax on a property disposal in the Netherlands. The upfront productivity charges include costs associated with targeted workforce reductions and asset write-offs, that were part of a corporation-wide initiative to improve productivity. The asset write-offs related to two factory closures and the exit of a formula business in the U.K.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the pending business combination of Kraft and Heinz, which was announced on March 25, 2015, and the related equity investments, based on the historical financial position and results of operations of Heinz and Kraft. Immediately prior to the consummation of the merger, each share of Heinz common stock issued and outstanding at such time (including shares of Heinz common stock to be issued pursuant to the equity investment) will be reclassified and changed into 0.443332 of a share of Heinz common stock. In the merger, all outstanding shares of Kraft common stock (other than deferred shares and restricted shares) will be converted into the right to receive, on a one-for-one basis, shares of Kraft Heinz common stock. In addition, the holders of record of the outstanding shares of Kraft common stock as of the record date immediately prior to the effective time of the merger shall each be entitled to receive the special cash dividend of $16.50 per share in respect of such shares of Kraft common stock held by them.

The following unaudited pro forma condensed combined balance sheet as of March 29, 2015 and the unaudited pro forma condensed combined statements of operations for the year ended December 28, 2014 and the three months ended March 29, 2015 presented herein are based on the historical financial statements of Heinz and Kraft after giving effect to the merger, the related equity investments and the assumptions and adjustments described in the accompanying notes to these unaudited pro forma condensed combined financial statements.

The Heinz statement of operations information for the year ended December 28, 2014 was derived from its audited consolidated financial statements and the Heinz balance sheet as of March 29, 2015, and the statement of operations information for the three months ended March 29, 2015 was derived from its unaudited condensed consolidated financial statements, all included elsewhere in this proxy statement/prospectus. The Kraft statement of operations information for the year ended December 27, 2014 was derived from its audited consolidated financial statements included in the Kraft Annual Report on Form 10-K for the year ended December 27, 2014. The Kraft balance sheet as of March 28, 2015 and statement of operations information for the three months ended March 28, 2015 was derived from its unaudited condensed consolidated financial statements included in the Kraft Quarterly Report on Form 10-Q for the quarter ended March 28, 2015.

The merger will be accounted for under the acquisition method of accounting for business combinations pursuant to the provisions of Accounting Standards Codification (“ASC”) 805, “Business Combinations,” (“ASC 805”). Because current shareholders of Heinz will own approximately 51% of the shares of Kraft Heinz common stock on a fully diluted basis immediately following the closing of the merger and the directors and management of Heinz will retain a majority of board seats and retain key positions in the management of The Kraft Heinz Company, Heinz is considered to be the acquiring company for accounting purposes. The unaudited pro forma condensed combined financial statements set forth below primarily give effect to the following:

 

    Application of the acquisition method of accounting in connection with the merger to reflect the aggregate consideration of $50.9 billion (“Purchase Price”);

 

    The issuance of Heinz shares to the Sponsors in connection with the equity investments;

 

    The pre-closing Heinz share conversion;

 

    The payment of the special cash dividend;

 

    The exchange of one share of Kraft Heinz common stock for each share of Kraft common stock in the merger;

 

    Transaction costs in connection with the merger; and

 

    Conformance of accounting policies.

 

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The unaudited pro forma adjustments, which Heinz believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial information. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.

Under ASC 805, assets acquired and liabilities assumed are recorded at fair value. The fair value of identifiable tangible and intangible assets acquired and liabilities assumed from the merger are based on a preliminary estimate of fair value. Any excess of the Purchase Price over the fair value of identified assets acquired and liabilities assumed will be recognized as goodwill. Significant judgment is required in determining the estimated fair values of indefinite lived intangible assets, definite lived intangible assets, inventory, property, plant and equipment, certain other assets and debt. Such a valuation requires estimates and assumptions including, but not limited to, estimating future cash flows and direct costs in addition to developing the appropriate discount rates and current market profit margins. Heinz management believes the fair values recognized for the assets to be acquired and the liabilities to be assumed are based on reasonable estimates and assumptions. Preliminary fair value estimates may change as additional information becomes available.

Under GAAP, consideration transferred in a business combination shall be measured at fair value. Since shares of Heinz common stock are not publicly traded and do not have a readily observable market price, the per share value used in these unaudited pro forma condensed combined financial statements equals the closing per share market price of Kraft common stock on May 12, 2015. GAAP provides that in an exchange of equity interests, an acquiree’s stock may be a more reliable measure of fair value. The quoted price of Kraft shares has been determined to be the most factually supportable measure available to support the determination of the fair value of the consideration transferred, given the market participant element of a widely held stock in an actively traded market. The number of shares of Kraft common stock used to calculate the Purchase Price in these unaudited pro forma condensed combined financial statements is based on the outstanding equity capitalization of Kraft as of May 12, 2015.

The unaudited pro forma condensed combined balance sheet as of March 29, 2015 gives effect to the merger as if it occurred on March 29, 2015, and combines the historical balance sheets of Heinz and Kraft as of March 29, 2015 and March 28, 2015, respectively. The unaudited pro forma condensed combined statements of operations for the year ended December 28, 2014 and the three months ended March 29, 2015 are presented as if the merger was consummated on December 30, 2013, the first business day of the Heinz 2014 fiscal year, and combines the historical results of Heinz and Kraft.

The unaudited pro forma condensed combined financial statements have been prepared by Heinz management in accordance with SEC Regulation S-X Article 11 and are not necessarily indicative of the combined financial position or results of operations that would have been realized had the transactions been completed as of the dates indicated, nor are they meant to be indicative of any anticipated combined financial position or future results of operations that The Kraft Heinz Company will experience after the transactions. In addition, the accompanying unaudited pro forma combined statements of operations do not include any pro forma adjustments to reflect expected cost savings or restructuring actions that may be achievable or the impact of any non-recurring activity and one-time transaction related costs.

Certain financial information of Kraft, as presented in its historical consolidated financial statements, has been reclassified to conform to the historical presentation in Heinz’s consolidated financial statements, for purposes of preparing the unaudited pro forma combined financial statements. Refer to note 4 of this unaudited pro forma condensed combined financial information for an explanation of these reclassifications.

The unaudited pro forma condensed combined financial statements, including the notes thereto, should be read in conjunction with the historical consolidated financial statements and related notes of Heinz and Kraft that are included elsewhere or incorporated by reference into this proxy statement/prospectus.

 

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Unaudited Pro Forma Condensed Combined Balance Sheet

March 29, 2015

 

(In millions except share and per share amounts)    Historical
Heinz
    Historical
Kraft
    Pro Forma
Adjustments
    Note
Reference
   Pro Forma
As Adjusted
 

ASSETS

           

Current assets:

           

Cash and cash equivalents

   $ 1,899      $ 1,178      $ 5      5a, c, k, l    $ 3,082   

Trade receivables, net

     818        1,151        —             1,969   

Other receivables, net

     294        68        —             362   

Inventories:

           

Finished goods and work-in-process

     996        1,389        234      5d      2,619   

Packaging material and ingredients

     236        411        —             647   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total inventories

     1,232        1,800        234           3,266   

Prepaid expenses

     164        149        —             313   

Other current assets

     70        658        (87   5j      641   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current assets

     4,477        5,004        152           9,633   

Property, plant and equipment:

     2,737        8,115        (2,569   5e      8,283   

Less accumulated depreciation

     471        3,921        (3,921   5e      471   
  

 

 

   

 

 

   

 

 

      

 

 

 

Property, plant and equipment, net

     2,266        4,194        1,352           7,812   

Other non-current assets:

           

Goodwill

     14,588        11,313        19,553      5g      45,454   

Trademarks, net

     11,109        2,227        37,173      5f      50,509   

Other intangibles, net

     1,668        11        4,241      5f      5,920   

Other non-current assets

     2,185        385        (171   5h, j      2,399   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total other non-current assets

     29,550        13,936        60,796           104,282   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total assets

   $ 36,293      $ 23,134      $ 62,300         $ 121,727   
  

 

 

   

 

 

   

 

 

      

 

 

 

LIABILITIES AND EQUITY

           

Current liabilities:

           

Short-term debt

   $ 1      $ —        $ —           $ 1   

Portion of long-term debt due within one year

     10        1,406        —             1,416   

Trade payables

     1,499        1,591        —             3,090   

Other payables

     118        38        —             156   

Accrued interest

     166        113        —             279   

Accrued marketing

     259        500        —             759   

Other accrued liabilities

     414        907        (10   5p      1,311   

Income taxes

     65        329        (33   5j, k, l      361   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total current liabilities

     2,532        4,884        (43        7,373   

Long-term debt and other non-current liabilities:

           

Long-term debt

     13,616        8,626        742      5i      22,984   

Deferred income taxes

     4,039        292        15,397      5j      19,728   

Non-pension post-retirement benefits

     191        3,380        (127   5p      3,444   

Other non-current liabilities

     553        1,435        (193   5p      1,795   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total long-term debt and non-current liabilities

     18,399        13,733        15,819           47,951   
  

 

 

   

 

 

   

 

 

      

 

 

 

Commitments and contingencies

           

Redeemable non-controlling interests

     21        —          —             21   

Preferred stock, 80,000 shares issued, $0.01 par value

     8,320        —          —             8,320   

Equity:

           

Common stock

     9        —          11      5a, m      20   

Warrants

     367        —          —             367   

Additional paid-in capital

     7,327        4,820        46,241      5a, m      58,388   

Retained earnings

     96        1,148        (1,179   5n      65   

Accumulated other comprehensive loss

     (989     (634     634      5o      (989

Treasury shares, at cost

     —          (817     817      5o      —     
  

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     6,810        4,517        46,524           57,851   

Noncontrolling interest

     211        —          —             211   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total equity

     7,021        4,517        46,524           58,062   
  

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and equity

   $ 36,293      $ 23,134      $ 62,300         $ 121,727   
  

 

 

   

 

 

   

 

 

      

 

 

 

See the accompanying notes to the unaudited pro forma condensed combined financial information.

 

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Unaudited Pro Forma Condensed Combined Statement of Operations

For the year ended December 28, 2014

 

(In millions except for per share data)    Historical
Heinz
    Historical
Kraft
     Pro Forma
Adjustments
    Note
Reference
   Pro Forma
As Adjusted
 

Sales

   $ 10,922      $ 18,205       $ (9   6a    $ 29,118   

Cost of products sold

     7,291        13,061         (528   6a,b,c,f,h      19,824   
  

 

 

   

 

 

    

 

 

      

 

 

 

Gross profit

  3,631      5,144      519      9,294   

Selling, general and administrative expense

  2,063      3,282      (378 6c,f,h