The Kraft Heinz Company has announced a major restructuring move as its board of directors unanimously approved a plan to separate into two publicly traded companies through a tax-free spin-off. The move is aimed at simplifying operations, focusing on growth priorities, and creating long-term shareholder value.
The Two New Companies
The separation will result in two focused businesses, with names to be finalized later:
1. Global Taste Elevation Co.
- Net Sales (2024): $15.4 billion
- Adjusted EBITDA (2024): $4.0 billion
- Core Brands: Heinz, Philadelphia, Kraft Mac & Cheese
- Focus: Sauces, spreads, seasonings, and shelf-stable meals
- Market Reach: ~75% from sauces/spreads, 20% from Emerging Markets, 20% Away From Home
This company will be positioned as a global leader in taste innovation, leveraging iconic brands and strong international demand to drive industry-leading growth.
2. North American Grocery Co.
- Net Sales (2024): $10.4 billion
- Adjusted EBITDA (2024): $2.3 billion
- Core Brands: Oscar Mayer, Kraft Singles, Lunchables
- Focus: North American staples across stable growth categories
- Market Reach: ~75% of sales from #1 or #2 category leaders
This division, led by Carlos Abrams-Rivera, will prioritize operational efficiency and steady cash flow, while also exploring growth opportunities in adjacencies and Away From Home channels.
Leadership Speaks
Miguel Patricio, Executive Chair of the Board, said:
“Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively. By separating into two companies, we can unlock the potential of each brand and create long-term shareholder value.”
Carlos Abrams-Rivera, CEO of Kraft Heinz, added: “This move will unleash the power of our brands and unlock the potential of our business. It’s a bold step forward in our transformation.”
What This Means for Investors
Both companies are expected to maintain investment-grade ratings, sustain the current dividend level, and have ample discretionary cash flow to:
- Invest in organic growth
- Return capital to shareholders
- Consider strategic acquisitions
Looking Ahead
The separation aims to provide sharper focus, reduced complexity, and customized capital allocation strategies for each business. Until the process is complete, Kraft Heinz will continue to operate as a unified company.
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