Kraft Heinz Shares Plunge as Firm Set to Be Split into Two

The Kraft Heinz Company (NYSE: KHC) announced on Tuesday, September 2, 2025, its decision to split into two independent publicly traded companies, effectively unwinding the decade-old merger that created one of the world’s largest food conglomerates.

The spinoff, expected to close in the second half of 2026, will separate the company’s North American grocery business from its global sauces and spreads operations. This major restructuring comes as the company struggles with declining valuations, sluggish sales, and challenges in effectively managing its diverse portfolio of iconic brands.

The split represents the latest example of large consumer goods companies abandoning the conglomerate model in favor of more focused business structures.

The Split Structure and Business Rationale Behind Kraft Heinz Breakup

The restructuring will create two distinct entities with different market focuses and growth strategies. The larger “Global Taste Elevation Co.” will house premium brands including Heinz, Philadelphia cream cheese, and Kraft Mac & Cheese, generating approximately $15.4 billion in annual sales, with 75% coming from spreads, seasonings, and sauces. The smaller “North American Grocery Co.” will include processed food brands like Oscar Mayer, Kraft Singles, and Lunchables, with around $10.4 billion in 2024 net sales, and will be led by current CEO Carlos Abrams-Rivera.

Executive Chair Miguel Patricio explained that the complexity of the current structure makes it challenging to allocate capital effectively and prioritize initiatives across different business segments. The company believes that separating into two focused entities will allow each to allocate appropriate resources and attention to unlock the potential of their respective brand portfolios. This strategic move follows the company’s May announcement that it was exploring opportunities to boost shareholder value after years of underperformance.

The decision reflects broader industry trends as major consumer brands reconsider the conglomerate model that was popular in previous decades. Companies are increasingly finding that focused, specialized operations can better compete against private-label products and respond more quickly to changing consumer preferences. The split is designed to create two companies that can each develop targeted strategies for their specific market segments and customer bases.

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KHC Stock Falls Over 6%

Kraft Heinz stock (KHC) fell sharply following the announcement, dropping 6.70% to $26.09 as of 12:07 PM EDT on September 2, 2025, amid broader market volatility. The stock has struggled significantly over the past year, declining 22.19% compared to the S&P 500’s 12.67% gain over the same period. Year-to-date, KHC shares are down 11.35% while the broader market has gained 8.20%, highlighting the company’s underperformance relative to major indices.

The company’s financial metrics reveal ongoing challenges, with a negative profit margin of -20.83% and diluted earnings per share of -$4.46 over the trailing twelve months. Despite these struggles, the company maintains a market capitalization of approximately $30.9 billion and pays a forward dividend yield of 5.72%. The stock’s 52-week range of $25.44 to $36.53 shows significant volatility, with shares currently trading near the lower end of this range.

Warren Buffett, whose Berkshire Hathaway holds a 27.4% stake, making it the largest shareholder, expressed disappointment with the split decision. Buffett told CNBC that while the original 2015 merger “didn’t turn out to be a brilliant idea,” he believes “taking the company apart will not fix its problems.” His skepticism adds uncertainty to the market’s reception of the restructuring plan, especially given Berkshire Hathaway’s recent $3.76 billion write-down of its Kraft Heinz investment.

Analysts remain cautiously optimistic, with average price targets around $30.29, suggesting potential upside from current levels if the split successfully unlocks shareholder value.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.