Kraft Heinz to split into two listed companies
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The news: Packaged food giant Kraft Heinz has announced plans to split into two companies, with one unit focused on sauces, spreads and seasonings while the other will sell groceries across North America.
The context: Kraft Heinz said in a statement published on Tuesday that the decision aims to create more streamlined, less complex businesses, “allowing both new companies to more effectively deploy resources toward their distinct strategic priorities."
The sauce-focused company with roughly USD15.4 billion ($23.66 billion) in net (annual) sales will be focused on “taste elevation” with brands including Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese.
The deal unwinds a mega merger that brough two of the industry’s largest packaged foods players together in 2015, going against the sector’s efforts to pursue mergers to increase scale. “Scale by itself is not the answer, but having scale along with focus creates opportunities,” Kraft Heinz CEO Abrams-Rivera told the WSJ.
The USD10 billion north American grocery business will be lead by current Kraft Heinz CEO Carlos Abrams-Rivera, with brands including Kraft singles, Lunchables and Oscar Mayer.
The new business names are yet to be finalised.
Centerview Partners is serving as financial adviser and Kraft Heinz expects the transaction to close in the second half of 2026.
The numbers: The company said the proposed spin-off is intended to be tax-free for Kraft Heinz and its shareholders. Kraft Heinz said it anticipates up to USD300 million of dis-synergies, with "clear opportunities to mitigate a substantial portion of these in the near term."
Shares in Kraft Heinz have fallen over 20% in the last year. The company posted a USD9.3 billion noncash impairment charge in the second quarter, attributing it to a sustained decline in share price and market capitalisation.
What they said: “Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas,” said Miguel Patricio, executive chair of the board for Kraft Heinz in a statement.
“By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value,” Patricio continued.
The sources: Kraft Heinz press release, WSJ
