Heinz is buying Kraft Foods to create the world's fifth largest food and beverage company, with sales of about $28 billion. Reports of a deal first came after markets closed on Tuesday.

Kraft (NYSE: KRFT) shares leaped $19.85, or 32.4%, to $81.17 U.S., in Wednesday's first hour of trading.

Kraft owns popular brands such as Jell-O, Maxwell House coffee and Planters peanuts. Heinz, of course, is famous for its ketchup, and also owns Lea & Perrins and Ore-Ida.

Kraft shareholders will receive stock in the Kraft Heinz Company, plus a special dividend of $16.50 U.S. per share funded by a $10-billion U.S. cash injection by Heinz owners 3G Capital and Warren Buffett's Berkshire Hathaway (NYSE: BRK.A).

This isn't the first time that Buffett has worked with 3G Capital. In 2013, they teamed up to acquire Heinz.

Berkshire Hathaway also helped 3G Capital finance Burger King's purchase of Canadian chain Tim Hortons last year.

Once the deal is done, Heinz shareholders will own 51% of the combined firm while Kraft shareholders will get a 49% stake.