Face-face plant at $ 57 billion in Warren Buffett: Kraft Heinz broke a decade after his megamenger was embittered

Actions slipped 7% after the announcement, and Buffett, of which Berkshire Hathaway still has a 27.5% stake, was frank on his feelings.

“It certainly did not prove to be a brilliant idea of ​​assembling them, but I do not think that dismantling them will repair it,” he told CNBC, adding that he was “disappointed” by the decision.

A division in two

The company has announced that it would be divided into two companies listed on the stock market by the end of 2026:

• Global Taste Elevation Co. will be focused on HEINZ classic items, such as sauces, tartinades and condiments, Ketchup Heinz, Kraft Mac & Cheese cheese and Philadelphia cream cheese.
• North American Grocery Co. Will access emblematic staples like Oscar Mayer, Kraft Singles, Maxwell House and Lunchables. The current CEO Carlos Abrams-Rivera will direct this unit, while the board of directors is looking for a new leader for the elevation of global taste.

Executive president Miguel Patricio launched this decision to simplify capital allowance and acquire a strategic concentration on a level of marketing.

“We can allocate the right level of attention and resources to unlock the potential of each brand,” he told Wall Street Journal.

The separation comes after a decade of underperformance. Since Kraft and Heinz merged in 2015 in 2015, the action lost more than $ 57 billion in market capitalization, has been beaten $ 15 billion in mangy writing and altered consumers’ rejection waves while buyers turn away from the transformed staples.

Buffett was frank on the misstep. In 2019, he admitted that Berkshire had “paid too much for Kraft”. Since then, the Oracle of Omaha has written billions on participation, while the 3G capital had been heading quietly towards the exit, leaving Berkshire as the mainly exposed and bruised shareholder.

Will a split help?

Separation poses a more difficult problem for investors: if consumers flee the “old” grocery brands that have not adapted to today’s health and well-being standards, why should separate brands be better done in the same silos?

“More marketing support is not a form of magic elixir”, analyst and yahoo finance The editor -in -chief Brian Sozzi wrote on LinkedIn on the agreement.

Robert Moskow of TD Cowen argued at Newspaper that food conglomerates often overestimate the advantages of size. “Food companies have found that their extent of influence in the grocery store does not necessarily give the advantages they expected,” he said.

In other words, Kraft Heinz’s break in two units can eliminate certain bureaucratic ineffectiveness, but that does not change the fact that there is simply less customer demand for hot dogs or processed foods such as lunches. For Buffett, split is a symbolic closing chapter on a rare investment calculation error. While Omaha’s Oracle is preparing to give the reins to Greg Abel at the end of the year, Kraft Heinz will be held as a history of prudence: even the most emblematic brands cannot exceed consumption tastes.