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Kraft Heinz Puts Split Plans on Hold, Invests $600 Million in Business Revitalization
CHICAGO, IL – Food giant Kraft Heinz has announced a significant shift in strategy, abandoning its previous plans to divide into separate companies. Instead, the company will inject $600 million into its business to tackle existing challenges and drive profitable growth.
The decision was confirmed by Kraft Heinz CEO Steve Cahillane, who stated on Wednesday that the company would no longer pursue the separation of its Kraft and Heinz entities. “My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan,” Cahillane said. He added that pausing the separation would eliminate “dis-synergies” that would have been incurred this year.
Cahillane, who took the helm in January, emphasized that the opportunity to address and rectify business problems is greater than initially perceived and, crucially, within the company’s control. The $600 million investment will target key areas such as marketing, sales, and research and development, with the aim of producing “superior” products and implementing “select pricing.”
Despite the strategic pivot, Cahillane assured stakeholders that Kraft Heinz maintains a robust balance sheet, attributed to “disciplined stewardship,” and is expected to continue generating excess revenues as it implements its new business plan.
This move effectively scraps the company’s prior intention to break up the conglomerate formed by a $46 billion merger in 2015, which created one of the world’s largest food companies. CNBC reported on the initial merger and the subsequent discussions about a potential split.
Noteworthy investor Warren Buffett, whose Berkshire Hathaway was a key player in the original Kraft Heinz merger, had previously expressed reservations about the idea of splitting the company again. Greg Abel, CEO of Berkshire Hathaway, who had recently begun reducing the conglomerate’s 28% stake in Kraft Heinz, voiced support for the new direction.
“We support CEO Steve Cahillane and the Kraft Heinz Board of Directors’ decision, under Steve’s new leadership, to pause work on the company’s previously planned separation,” Abel stated. He believes this will allow management to “commit to strengthening Kraft Heinz’s ability to compete and serve customers.”
John Cahill, Chairman of the Kraft Heinz Board, praised Cahillane’s leadership, highlighting his “deep industry experience and proven track record of building brands and leading large-scale transformations.” Cahill expressed confidence that Cahillane’s “fresh, consumer-first perspective” is already yielding significant benefits and creating a “clear glidepath back to profitable growth.” He concluded by reiterating the board’s excitement for the future of Kraft Heinz, believing the decision to focus resources on growth is the correct one at this time.