HJ HEINZ, which owns Lea and Perrins sauce factory in Worcester, is to merge with Kraft Foods to form the fifth-largest food group in the world.

The new conglomerate will be known as the Kraft Heinz Company, with Kraft shareholders taking a 49 per cent stake and Heinz shareholders taking the remainder. In a statement on the New York Stock Exchange, Kraft said the deal would create "substantial value" for its shareholders.

Kraft purchased Midlands confectioner Cadbury in 2010, but since 2012 Cadbury has been part of Mondelez, which spun out of Kraft.

Alex Behring, chairman of Heinz and 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."

The Kraft Heinz Company will be headquartered in Pittsburgh, America. Heinz has its UK head office in Hayes, as well as plants in Worcester, Wigan, Hayes, Telford and Kendal. It employs 2,500 staff in the UK.