Global food company Kraft Heinz has announced that its board of directors has unanimously approved a plan to separate the company into two independent, publicly traded companies.
Kraft Heinz said the separation was designed to “maximise its capabilities and brands while reducing complexity”, aiming to allow both new companies to deploy resources more effectively.
The two companies would be named Global Taste Elevation Co and North American Grocery Co, with the separation reportedly reducing operational complexity while allowing the companies to customise capital allocation.
The companies are expected to have “ample discretionary cash flow” to invest in organic growth, return capital to shareholders and consider strategic transactions, said Kraft Heinz.
Global Taste Elevation Co will include brands such as Heinz, Philadelphia and Kraft Mac & Cheese, and North American Grocery Co will include the Oscar Mayer, Kraft Singles and Lunchables brands.
“By separating into two companies, we can allocate the right level of attention… to drive better performance.”
Miguel Patricio, executive chair of the board for Kraft Heinz, stated: “Kraft Heinz’s brands are iconic and beloved, but the complexity of our current structure makes it challenging to allocate capital effectively, prioritise initiatives and drive scale in our most promising areas.”
“By separating into two companies, we 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.
“I look forward to working closely with Carlos and the Kraft Heinz team in the months ahead to prepare the organisation for the separation.”
Carlos Abrams-Rivera, Kraft Heinz CEO, said: “This move will unleash the power of our brands and unlock the potential of our 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.”
