Kraft Heinz Company will split into two independent, publicly-traded companies, unwinding a merger 10 years ago that failed to live up to expectations.
The food and beverage giant said one company would focus on groceries and the other on sauces and spreads, with the names to be determined ahead of the completion of the transaction in the second half of 2026.
Executive Chair Miguel Patricio said Kraft Heinz’s brands were iconic and beloved, but the complexity of its structure made it challenging to allocate capital effectively, prioritise initiatives and drive scale in the most promising areas.
“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 said in a press release.
The separation is intended to be tax-free for Kraft Heinz and its shareholders with clear near-term opportunities to mitigate a substantial portion of the dis-synergies, which it estimated at up to US$300 million.
The company said the current dividend level was expected to be maintained and management was targeting capital structures to maintain investment-grade ratings.
It described the companies as:
- Global Taste Elevation Co. - US$15.4 billion (A$23.5 billion) of net sales and $4.0 billion of adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) in 2024, and
- North American Grocery Co. - $10.4 billion of net sales and $2.3 billion of EBITDA.
Chair Miguel Patricio will serve as Executive Chair, and a separation committee led by Vice Chair John Cahill will be established to oversee the separation.
“This move will unleash the power of our brands and unlock the potential of our business,” said CEO Carlos Abrams-Rivera, who will become CEO of North American Grocery Co.
The Board is working with an executive search firm to identify potential CEO candidates for Global Taste Elevation Co.
Kraft Heinz shares (NASDAQ: KHC) closed $1.95 (6.97%) lower at $26.02 on Tuesday (Wednesday AEST), capitalising the company at $30.71 billion, before firming to $26.10 in after-hours trading.
The shares have sunk by 60% since the merger in 2015 as consumers reduced spending, particularly since COVID-19 pandemic.
With antecedents dating back to 1903 and 1869 respectively, Kraft Heinz operates in more than 190 countries with brands and products including Kraft cheese and dressings, Heinz ketchup, baked beans and sauces and Philadelphia cream cheese.
