By Jesse Newman | Wall Street Journal
After more than a decade together at Kraft Heinz KHC -7.20%decrease; red down pointing triangle, ketchup is breaking up with hot dogs.
The food giant said it plans to split its business into two companies, unwinding an industry megamerger that married two packaged-food behemoths.
In the breakup, one global company would focus on sauces, spreads and seasonings, while another would sell grocery staples in North America. The move aims to create businesses with more focus and less complexity, Kraft Heinz said, and deepens a reversal of the food industry’s yearslong strategy of pursuing deals to build scale.
“Scale by itself is not the answer, but having scale along with focus creates opportunities,” said Kraft Heinz Chief Executive Carlos Abrams-Rivera in an interview.
Abrams-Rivera will head the $10 billion North America grocery business, which will include brands such as Oscar Mayer, Kraft Singles and Lunchables. The other business, one with roughly $15 billion in annual sales, will focus globally on “taste elevation” with brands including Heinz ketchup, Philadelphia cream cheese and Kraft Mac & Cheese, the company said.
“This split may ultimately be a positive change for investors as it can potentially unlock shareholder value through more focused business units.” -Shruti Gurudanti, Rose Law Group partner, director of corporate transactions
