MW Big Warren Buffett-backed merger calls it quits as Kraft Heinz announces breakup

By Steve Gelsi

Shareholders of the Berkshire Hathaway-backed food giant will get shares in two publicly traded food companies to be named at a later date

Kraft Heinz is breaking itself up 10 years after the two companies merged with backing from Warren Buffett.

Ten years after Warren Buffett backed the merger of Kraft Foods and Heinz, the combined company is breaking up, as Kraft Heinz Co. on Tuesday confirmed what Wall Street has expected for months.

Kraft Heinz will split into two separate, publicly traded companies, which was where they were in 2015 when Buffett teamed up with Brazilian private-equity giant 3G to scale up businesses known for their macaroni and cheese and ketchup.

Buffett said in 2019 that he had overpaid for Kraft Heinz. He continues to own a more than 27% stake in the company but no longer has representation on the company's board.

Investors should be happy with the breakup. Through Friday, the stock $(KHC)$ has tumbled 54.4% since the day before the original merger was announced, while the S&P 500 index SPX has soared 208.9% over that same time span.

Under the deal announced Tuesday, shareholders of Kraft Heinz will get shares of two yet-to-be-named equities in a tax-free spinoff that is expected to close by the end of 2026.

The current dividend level will be maintained in aggregate, the company said.

Kraft Heinz's stock was up 0.3% in premarket trading Tuesday.

For now, Kraft Heinz is calling one company "North American Grocery Co." with annual sales of about $10.4 billion to be headed up by Carlos Abrams-Rivera, who is currently chief executive of Kraft Heinz. That business will include Oscar Mayer meats, Lunchables and Kraft Singles.

The second company, "Global Taste Elevation Co.," with sales of $15.4 billion, will be led by a yet-to-be named chief executive. That business will include Heinz ketchup, Kraft Macaroni & Cheese and Philadelphia cream cheese.

Stock ticker symbols, like the brand names, have yet to formalized.

While the two companies sold the 2015 combination as a way to grow through scale, this time around the breakup is seen as a way to free up each business to thrive.

"We strongly believe that increased focus will translate into better performance and value creation for shareholders," Jack Pope, lead director of the Kraft Heinz board, said in a statement.

Speculation about a breakup increased in May, when Kraft Heinz announced it was considering strategic alternatives to unlock shareholder value.

At that time, Kraft Heinz said that it would reduce the size of its board by two members and that the action would result in the departure of two Berkshire Hathaway $(BRK.A)$ $(BRK.B)$ executives, Alicia Knapp and Timothy Kenesey.

Then, the Wall Street Journal reported late last week that the deal was nearing a public announcement.

At last check, Kraft Heinz had a market capitalization of $33 billion.

In Berkshire Hathaway's latest disclosure, the company said it owned 325.6 million Kraft Heinz shares, or 27.5% of the shares outstanding as of July 26. The value of Berkshire's stake was $9.11 billion as of Friday's closing price.

Kraft Heinz said the separation could generate cost savings of up to $300 million "with clear opportunities to mitigate a substantial portion of these in the near term."

Kraft Heinz's stock price has fallen 8.9% this year, while the S&P 500 has gained 9.8%.

Also read: Kraft Heinz is reportedly weighing a breakup. Some analysts have already said it should 'slim down.'

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 02, 2025 09:00 ET (13:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.