Kraft Heinz has agreed to pay USD 450m to settle a class action court case in which Swedish pension fund AP7 was the lead plaintiff.

AP7 stated that the case involved “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 is the 41st largest class action settlement in the US in history.

It was based on Kraft Heinz’s claim in connection with the merger between the companies that it saw increased profits due to ‘cost-saving synergies’.

However, AP7 argued that cost-cutting measures had impacted the company’s ability to generate revenue and affected the Kraft Heinz brand.

Kraft Heinz’s profits since the merger have declined, which AP7 stated had led to the firm making additional brand investments, failing to implement cost savings and being forced to implement intangible asset write-downs.

The pension fund argued that these factors had a “clear connection” to the company’s share price falling, which negatively impacted investors, including AP7.

“We welcome this settlement with Kraft Heinz,” commented AP7 CEO, Richard Gröttheim.

“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 we win a case like this, it benefits all shareholders."

Legal proceedings are one of the tools that AP7 uses for ownership governance and the pension fund current has ongoing legal proceedings against approximately 20 companies.

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