Heinz and Kraft Foods Group have struck a merger agreement that will create the world's fifth-largest food maker. 

The new company, The Kraft Heinz Co., will generate annual revenues of around US$29bn. It will own eight billion dollar brands and five brands whose sales total between $500m and $1bn. 

The stock and cash transaction would see Kraft shareholders receive a special cash dividend of $16.50 per share upon closing and stock in the combined company representing a 49% stake. Heinz's private equity owners, Berkshire Hathaway and 3G Capital, will invest an additional $10bn in The Kraft Heinz Co and existing Heinz shareholders will collectively own 51% of the new entity. The terms of the agreement have been unanimously backed by the Heinz and Kraft boards.  

In a joint statement from Kraft and Heinz's owners, the group's stressed that the new company would benefit from "significant synergy opportunities". The companies also emphasised the top-line opportunity. The Kraft Heinz Co will have a "strong platform for organic growth in North America" and globally "by combining Kraft’s brands with Heinz’s international platform", they argued. 

Alex Behring, chairman of Heinz and the managing partner at 3G Capital, said: "By bringing together these two iconic companies through this transaction, we are creating a strong platform for both US and international growth. Our combined brands and businesses mean increased scale and relevance both in the US and internationally."

John Cahill, Kraft chairman and CEO was particularly upbeat on the prospects of leveraging Kraft's brands internationally. "This combination offers significant cash value to our shareholders and the opportunity to be investors in a company very well positioned for growth, especially outside the United States, as we bring Kraft’s iconic brands to international markets.”

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Upon closing, Behring will takeover as chairman of The Kraft Heinz Co while Cahill will become vice chairman and chair of a newly formed board-level operations and strategy committee. Heinz CEO Bernardo Hees will take on the responsibilities of chief executive of the enlarged group. 

The board will consist of five members appointed by the current Kraft board, as well as the current Heinz board. It will include three members from Berkshire Hathaway and three members from 3G Capital. 

Warren Buffett, chairman and CEO of Berkshire Hathaway, added: "This is my kind of transaction, uniting two world-class organisations and delivering shareholder value. I’m excited by the opportunities for what this new combined organisation will achieve."

The deal is subject to approval by Kraft shareholders, regulatory approvals and other customary closing conditions. It is expected to close in the second half of 2015.

Is the merger a growth play for both businesses? Read our analysis here.