Kraft Heinz Splits Into Two Companies

The Nasdaq-listed Kraft Heinz Company, will split into two independent, publicly traded companies through a tax-free spin-off and is designed to maximise its capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities.

Kraft Heinz is the third-largest food and beverage company in North America and the fifth-largest food and beverage company in the world, with eight $1 billion+ brands.

This focus will enable stronger performance while preserving the scale to compete and win in today’s environment. The two resulting companies, whose names will be determined at a later date, will be “Global Taste Elevation Co,” – a global leader in taste elevation and shelf-stable meals with approximately $15.4 billion in 2024 net sales and approximately $4 billion in 2024 Adjusted EBITDA.

This company will include a roster of iconic brands and local jewels, with $3 billion brands – Heinz, Philadelphia and Kraft Mac & Cheese– with approximately 75% of net sales coming from sauces, spreads and seasonings.

Approximately 20% of 2024 net sales are in the Emerging Markets and approximately 20% are in away from home. Global Taste Elevation will be well positioned to drive industry-leading growth across attractive categories and geographies, leveraging a proven go-to-market model and the brand growth system to deliver scale and performance.

The other company – North American Grocery Co – a scaled portfolio of North America staples with approximately $10.4 billion in 2024 net sales and around $2.3 billion in 2024 Adjusted EBITDA.

This company, which will be led by Carlos Abrams-Rivera, will include a portfolio of beloved brands, including $3 billion brands – Oscar Mayer, Kraft Singles and Lunchables. Approximately 75% of net sales come from brands that are #1 or #2 in their respective categories.

Kraft Heinz’s Executive Chair Miguel Patricio said that the parent company’s brands were iconic and beloved, but the complexity of their current structure makes it challenging to allocate capital effectively, prioritise initiatives and drive scale in most promising areas.

He said that by separating into two companies, they 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.

Strategic Rationale

The separation will provide both companies with more strategic and operational focus, enabling them to dedicate the right level of attention and resources to all areas of the business, allowing each respective brand portfolio to reach its full potential, reduce operational complexity.

The companies are expected to have ample discretionary cash flow to invest in organic growth, return capital to shareholders and consider strategic transactions. In aggregate, the current dividend level is expected to be maintained. Management is targeting capital structures to maintain investment-grade ratings for both companies.

Kraft Heinz CEO Carlos Abrams-Rivera said that this move will unleash the power of their brands and unlock the potential of the business.

“This next step in our transformation is only possible because of the commitment of our 36,000 talented employees who deliver quality and value for consumers every day. We will continue to operate as ‘one Kraft Heinz’ throughout the separation process,” Carlos added.

Transaction Details

The proposed separation is intended to be tax-free for Kraft Heinz and its shareholders. The company anticipates up to $300 million of dis-synergies, with clear opportunities to mitigate a substantial portion of these in the near term.

Kraft Heinz currently expects the transaction to close in the second half of 2026. The transaction will follow the satisfaction of customary conditions, including final approval by the Kraft Heinz Board of Directors, receipt of a tax opinion with respect to the tax-free nature of the separation and effectiveness of appropriate filings with the US Securities and Exchange Commission.

Capital structure, and certain other matters for each business, such as board composition, company name and brand allocation, will be announced at a later date.