Ketchup maker HJ Heinz Co. is entering an acquisition deal with Kraft Foods Group Inc. by buying its majority stake, leading to the creation of the third-largest food company in North America.

The deal would provide Heinz, a company owned by 3G Capital and Berkshire Hathaway Inc of Warren Buffett, with accessibility to the brands of Kraft, which it says are in 98 percent of households in North America and include famous names such as Oscar Mayer and Jell-O. Heinz’s international presence offers an incredible opportunity to sell those brands in the overseas market.

The executives said on Wednesday that the Kraft stockholders will be getting one share under the deal in the combined firm, which will be known as Kraft Heinz Co., and a special cash that will be the dividend of USD 16.50 for every share held. Heinz shareholders will own 51 percent of the combined firm, while the remaining shares will be held by Kraft.

The companies dealing in packaged-food items like Kraft are struggling sluggish demands as there is a shift in consumers’ perception towards products that are believed to be healthier.

The new entity is likely to save nearly USD 1.5 billion in costs annually by 2017-end. The company will possess eight brands worth more than USD 1 billion each.

The combined publicly traded company, Kraft Heinz, will be head by Heinz Chief Executive Official, Bernardo Hees. The company will possess revenue of nearly USD 28 billion, which is roughly half of market leader PepsiCo in the year 2014.

Berkshire Hathaway will own more than 320 million shares in the joint firm, which will have nearly 1.22 billion outstanding shares, Buffett said.

Kraft shares increased over 38 percent near USD 85 in the morning trading.