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AP7 in settlement with Kraft Heinz for $450 million

Defendants have agreed to pay $450 million to settle a class action in which AP7 was the lead plaintiff.

The case concerned alleged materially misleading statements made in connection with the 2015 merger of Kraft Foods and Heinz. The case was handled by the US District Court for the Northern District of Illinois and the settlement, which was published on May 5, was the 41st largest US class action settlement of all time.

Kraft Heinz claimed in connection with the merger that it saw increased profits due to cost-saving synergies between the companies. But instead, heavy cost-cutting measures led to a decline in the company’s ability to generate revenue and tarnished the Kraft Heinz brand, as well as leading to a large impairment of intangible assets.

In the years following the merger, profits for Kraft Heinz have fallen due to that the company has been forced to further brand investments, it has failed to implement cost savings and was forced to implement write-downs of intangible assets. The effect of these failures has led to a significant decline in the company’s share price, which has affected investors such as AP7.

Litigation is one of the tools in AP7’s active ownership toolbox and the fund has ongoing lawsuits against approximately 20 companies.

“We welcome this settlement with Kraft Heinz. It is a clear example of how AP7 uses the opportunity to pursue legal proceedings through class action against companies that treated shareholders incorrectly and negatively affected the share price. It’s not all capital owners who pursue lawsuits against companies, but when a case like this resolves, it benefits all shareholders”, says Richard Gröttheim, CEO of AP7.

Read the case here: https://www.dandodiary.com/wp-content/uploads/sites/893/2023/05/Kraft-Heinz-Settlement-Stipulation.pdf

Read more about the case here: https://www.ai-cio.com/news/kraft-heinz-agrees-to-settle-class-action-securities-lawsuit-for-450-million/