Kraft Heinz

Definition

Kraft Heinz is a global food and beverage company formed by the merger of Kraft Foods Group and H.J. Heinz Company in 2015. It is publicly traded and has a diverse portfolio of well-known brands, impacting its capital structure and financing strategies.

5 Must Know Facts For Your Next Test

1. Kraft Heinz was created through a merger that significantly impacted its capital structure.
2. The company's weighted average cost of capital (WACC) includes both equity and debt components due to its public trading status.
3. Mergers like that of Kraft Heinz often lead to changes in the firm's risk profile, affecting WACC calculations.
4. The firm’s diverse product portfolio can influence its beta, an essential factor in calculating WACC.
5. Kraft Heinz's financial strategies can serve as practical examples for understanding how firms raise capital through both equity and debt.

Review Questions

• What year did Kraft Heinz form, and what companies merged to create it?
• How does the merger influence Kraft Heinz's weighted average cost of capital?
• Why is understanding a company’s product portfolio important in calculating WACC?

Related terms

Weighted Average Cost of Capital (WACC): The average rate a company is expected to pay to finance its assets, considering both equity and debt.

Beta: A measure of a stock's volatility in relation to the overall market.

Capital Structure: The mix of different forms of external funds used by a firm to finance its operations and growth.