Kraft Heinz is splitting up

"The breakup comes a decade after its messy mega-merger, orchestrated by billionaire investor Warren Buffett and considered one of his notable missteps. In recent weeks, both Kraft Heinz and Buffett's Berkshire Hathaway took multibillion-dollar impairment charges reflecting the declining value of the food giant. Kraft Heinz spent years slicing its costs while rivals invested in new ideas to keep up with changing consumer tastes."

"Budget-conscious shoppers have been buying more store-brand packaged foods, while people willing to spend extra often reach for fresher alternatives to processed products. Now, Kraft Heinz executives hope the sum of two separate companies will be greater than the firm's current value. The first, which Kraft Heinz is calling "Global Taste Elevation Co." as a placeholder name, will focus on shelf-stable foods and encompass Heinz, Philadelphia and Kraft Mac & Cheese."

Kraft Heinz is dividing into two separate companies to increase overall value after a decade of underperformance following the 2015 merger led by Berkshire Hathaway and 3G Capital. Aggressive cost-cutting failed to produce sustainable growth, prompting large impairment charges and a nearly $8 billion net loss. Changing consumer preferences toward store brands and fresher alternatives weakened demand for processed products. One new company will focus on shelf-stable brands including Heinz, Philadelphia and Kraft Mac & Cheese, while a smaller company will house brands such as Oscar Mayer, Maxwell House, Capri Sun and Lunchables.

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