A source familiar with the matter has told Reuters that the Brazilian private equity firm 3G Capital is in negotiations to buy Kraft Foods Group for about $40bn (£27bn).

The possible deal was firstly reported by The Wall Street Journal, which said that Kraft may be valued at $40bn.

Two years ago, 3G teamed up with Warren Buffett’s Berkshire Hathaway with a motive to acquire HJ Heinz for $23.2bn. HJ Heinz is the maker of ketchup and baked beans, among other things. 3G Capital is now expected to merge Kraft with Heinz if it clinches a deal. In May, Buffett had said that he expected to work with 3G on more transactions.

In the US, Kraft is battling sluggish demand for packaged food products. Shares of Kraft rose around 16.5% to $71.4 in trading after the bell.

According to Thomson Reuters data, as of 2nd of March, Kraft had 588.13m shares outstanding and on the basis of Tuesday’s close of $61.32, Kraft had now a market capitalization of $36.06bn.
None of 3G Capital, Berkshire and Kraft was available for the comment.

In January, the Journal had reported that the Brazilian private equity firm was looking at new acquisition targets once investors pledged about $5bn to form a new takeover fund.

In the past, 3G Capital was criticized for its decision to cut thousands of jobs at Heinz. Eleven of the top twelve Heinz executives were replaced after four months of Berkshire and 3G Capital’s takeover and was followed by a series of layoffs.

Contrast to some of its peers, Kraft has remained away from expanding into faster-growing areas such as natural and organic foods through acquisitions.

In 2012, Kraft split into two companies, with Kraft Foods which focuses on grocery products in North America, and Mondelez International Inc, including the Cadbury’s brand, on snack products.