Kraft Foods might be acquired by Brazil’s 3G Capital

US-based food and beverage company Kraft Foods Group might soon be acquired by Brazilian private equity firm 3G Capital, which acquired ketchup maker HJ Heinz for $23.2bn two years ago.

Reuters reported sources as saying that 3G expected to merge Kraft with Heinz in the case that the deal was finalised, and that any deal would be valued at more than $40bn.

3G acquired private fast-food restaurant Burger King Worldwide in 2010. Last year, the firm bought Canadian coffee-and-doughnut retailer Tim Hortons through its Burger King holding for $11bn, which was financed in part by investor Warren Buffett.

Wall Street Journal reported that Kraft was roughly valued at $37bn, and while the price of the deal being negotiated is still unclear, it was possible that it would be kept at well over its value.

After acquiring Heinz, 3G was criticised for laying off hundreds of workers, and closing factories. However, the company said that its intention was to expand, which could not be achieved by cost cuts alone.

According to Wall Street Journal, Kraft’s revenue last year was around $18bn, with its net profit having dipped around 62% to $1bn, as it had to deal with higher commodity costs and charges related to post-employment benefit plans.

Recently, Kraft was in the news owing to a major recall of its Macaroni & Cheese Dinner, due to the possible presence of small pieces of metal. It is known as the manufacturer of products such as Oscar Mayer deli meats, Cool Whip dessert toppings and Maxwell House coffee.