The Kraft Heinz Company today announced that its board of directors has unanimously approved a plan to separate the company into two independent, publicly traded companies through a tax-free spin-off. 

The separation is designed to maximize Kraft Heinz’s capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities.

This focus will enable stronger performance while preserving the scale to compete and win in today’s environment.

“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,” said Carlos Abrams-Rivera, Kraft Heinz CEO.

The two resulting companies, whose names will be determined at a later date, will be:

•  “Global Taste Elevation Co.” – a global leader in Taste Elevation and shelf-stable meals with approximately $15.4 billion in 2024 net sales and approximately $4.0 billion in 2024 Adjusted EBITDA. This company will include a roster of iconic brands and local jewels, with three billion-dollar brands – Heinz, Philadelphia and Kraft Mac & Cheese– with approximately 75% of net sales coming from sauces, spreads and seasonings. Approximately 20% of 2024 net sales are in Emerging Markets and approximately 20% are in Away From Home. This company will be well positioned to drive industry-leading growth across attractive categories and geographies, leveraging a proven go-to-market model and the Brand Growth System to deliver scale and performance.
  
  
•  “North American Grocery Co.” – a scaled portfolio of North America staples with approximately $10.4 billion in 2024 net sales and approximately $2.3 billion in 2024 Adjusted EBITDA. This company, which will be led by Carlos Abrams-Rivera, will include a portfolio of beloved brands, including three billion-dollar brands – Oscar Mayer, Kraft Singles and Lunchables. Approximately 75% of net sales come from brands that are No. 1 or No. 2 in their respective categories. This company is expected to generate reliable free cash flow through operational efficiency across stable growth categories and through the pursuit of growth opportunities for its brands in existing categories, adjacencies and Away From Home.

Courtesy The Kraft Heinz Company.  

The separation will provide both companies with more strategic and operational focus, enabling them to:

• Dedicate the right level of attention and resources to all areas of the business, allowing each respective brand portfolio to reach its full potential.
• Reduce operational complexity, driving further efficiencies and industry-leading margins.
• Customize capital allocation based on the strategic ambition of each company, accelerating performance and retaining financial flexibility.

The companies are expected to have ample discretionary cash flow to invest in organic growth, return capital to shareholders and consider strategic transactions.

In aggregate, the current dividend level is expected to be maintained. Management is targeting capital structures to maintain investment-grade ratings for both companies.

Following a thorough evaluation of potential strategic transactions, Kraft Heinz has determined that separating into two standalone companies, “Global Taste Elevation Co.” and “North American Grocery Co.”, offers the most compelling opportunity to unlock long-term value for all Kraft Heinz shareholders.

Abrams-Rivera will continue to serve as CEO of Kraft Heinz and will become CEO of “North American Grocery Co.” upon completion of the separation.

The board has been working with a nationally recognized global executive search firm to identify potential CEO candidates for “Global Taste Elevation Co.” Kraft Heinz has no plans to change its current headquarter locations.

In connection with the strategic review and the board’s unanimous decision to separate Kraft Heinz into two independent, publicly traded companies, Miguel Patricio, the current chair of the board, will become executive chair. Patricio will work closely with Abrams-Rivera to prepare the organization for the separation. Patricio has served as chair of the board since May 2022 and was the company’s CEO from June 2019 to December 2023.

The board has also formed a Separation Committee, led by John Cahill, to oversee the execution of the proposed separation. Cahill has served as vice chair of the board since July 2015, prior to which he served as chairman and CEO of Kraft Foods Group, Inc. from 2014 to 2015 and Kraft’s executive chairman from 2012 to 2014.

The proposed separation is intended to be tax-free for Kraft Heinz and its shareholders. The company anticipates up to $300 million of dis-synergies, with clear opportunities to mitigate a substantial portion of these in the near term.

Kraft Heinz currently expects the transaction to close in the second half of 2026. The transaction will follow the satisfaction of customary conditions, including final approval by the Kraft Heinz Board of Directors, receipt of a tax opinion with respect to the tax-free nature of the separation and effectiveness of appropriate filings with the U.S. Securities and Exchange Commission.

Capital structure, and certain other matters for each business, such as board composition, company name and brand allocation, will be announced at a later date.

About the Kraft Heinz Company 
We are driving transformation at The Kraft Heinz Company, inspired by our Purpose, Let's Make Life Delicious. Consumers are at the center of everything we do. With 2024 net sales of approximately $26 billion, we are committed to growing our iconic and emerging food and beverage brands on a global scale. We leverage our scale and agility to unleash the full power of Kraft Heinz across a portfolio of eight consumer-driven product platforms. As global citizens, we're dedicated to making a sustainable, ethical impact while helping feed the world in healthy, responsible ways.