Shares of Kraft Heinz (KHC 0.96%) were tumbling today after the packaged food giant said it would split into two companies, effectively unwinding a merger that created the behemoth 10 years ago.
Investors gave a thumbs-down to the deal, as Kraft Heinz stock has badly lagged its peers since the merger, and investors seem unconvinced that a split is the solution. As of 12:16 p.m. ET, the stock was down 6.7%.
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A big food divorce
The merger of Kraft and Heinz a decade ago attracted high-profile backers like 3G Capital and Warren Buffett's Berkshire Hathaway. However, the food giant struggled with shifting consumer tastes away from processed foods, as well as bloated valuations for its brands, which led to billions in write-downs.
In a press release this morning, the company said it would split into two companies, whose names would be chosen at a later date. The first, currently called "Global Taste Elevation Co.," will include brands like Heinz, Philadelphia, and Kraft Mac & Cheese and be based around sauces, spreads, and seasonings. The second, dubbed "North American Grocery Co.," will include Oscar Mayer, Kraft Singles, and Lunchables, and is made up primarily of brands that are No. 1 or No. 2 in their respective categories.
The argument for the breakup
Similar to past breakups, the companies are arguing that the move will reduce operational complexity and allow each company to allocate capital according to its strategic goals.
The decision comes after the company said in May 2025 that it was evaluating different transactions to unlock shareholder value. Still, investors seem unimpressed with the move and may have been hoping for a sale.
Also weighing in on the stock, Warren Buffett told CNBC he is "disappointed" with the split, saying he doesn't think it will solve the company's problems, which likely added to the sell-off.
