The rumored breakup of Kraft Heinz could come this week, as the company bets that a new Kraft and a new Heinz would be worth more separately than together.
The Wall Street Journal, which published the first story on the possible split back in July, over the weekend reported the company is close to enacting the breakup plan, citing people familiar with the matter.
The transaction aims to split the company into two separate units focusing on grocery and sauces. The grocery business, including many Kraft products, could be valued at as much as $20 billion on its own, the Journal said. The other company would focus on condiments – think Heinz ketchup and mustards and Kraft mayonnaise and salad dressings.
Kraft Heinz’s current market value is around $33 billion, the result of underperformance, asset sales and several write-downs. The most recent devaluation was a $9.3 billion non-cash impairment charge announced in July, “primarily driven by a sustained decline in our share price and market capitalization,” the company said on July 30. That resulted in a net loss for the second quarter of $7.8 billion against sales of under $6.4 billion.
Kraft Heinz sales were $26.5 billion one year after the 2015 merger. In the years since, only 2023 sales eclipsed that, and only by $153 million. Last year’s sales were $25.8 billion.
Kraft Heinz's stock price peaked at $92.20 a share on May 31, 2017. It sank below $26 in late June, just before the first Wall Street Journal story of a possible split, and has been hovering around $27 since.
The merger of the two hundred-year-old companies was engineered in 2015 by Brazil’s 3G Capital and Warren Buffett’s Berkshire Hathaway, which together bought H.J. Heinz Co. two years earlier.
About the Author
Dave Fusaro
Editor in Chief
Dave Fusaro has served as editor in chief of Food Processing magazine since 2003. Dave has 30 years experience in food & beverage industry journalism and has won several national ASBPE writing awards for his Food Processing stories. Dave has been interviewed on CNN, quoted in national newspapers and he authored a 200-page market research report on the milk industry. Formerly an award-winning newspaper reporter who specialized in business writing, he holds a BA in journalism from Marquette University. Prior to joining Food Processing, Dave was Editor-In-Chief of Dairy Foods and was Managing Editor of Prepared Foods.