Kraft Heinz splits after ten years of marriage, "wedding officiant" Buffett: disappointed with the split, stock price once fell over 7%

The merger of Kraft Heinz, led by Warren Buffett ten years ago, has ended in a split. The "Oracle of Omaha" expressed disappointment this Tuesday regarding Kraft Heinz's announced decision to split, believing that dismantling the company will not resolve its fundamental issues. The company's stock price plummeted.

On Tuesday, September 2nd, Eastern Time, Kraft Heinz's stock opened lower and continued to decline, dropping over 7% during intraday trading, hitting a daily low of 7.6% at midday, and closing down nearly 7%, erasing all gains from the past two months and marking the lowest closing price since June 30. As of Tuesday's close, Kraft Heinz's stock has fallen 15.3% since the beginning of the year, significantly underperforming the market, while the S&P 500 index has risen over 9% during the same period.

Kraft Heinz announced on Tuesday that it will split into two independent publicly traded companies, officially ending the $46 billion merger transaction led by Buffett's Berkshire Hathaway and 3G Capital in 2015. As the largest shareholder with a 27.5% stake, Berkshire Hathaway has never sold any Kraft Heinz shares since the merger in 2015.

The split plan divides Kraft Heinz into two parts: one company will focus on sauces, condiments, and shelf-stable meals, with annual sales of $15.4 billion; the other will include North American grocery brands such as Oscar Mayer, Kraft Singles, and Lunchables, with annual revenue of $10.4 billion. The transaction is expected to be completed in the second half of 2026.

Buffett Expresses Disappointment, Believes Split is Not a Good Strategy

This Tuesday, media reports revealed that Buffett expressed disappointment over the idea of splitting Kraft Heinz and was also disappointed that shareholders would not vote on the company's future development.

Buffett admitted that the merger transaction from ten years ago did not perform well. The merger of Kraft and Heinz "was not a brilliant idea." He stated that although the initial merger did not achieve the expected success, he does not believe that splitting the company will solve the problems. Buffett acknowledged this, but he does not think that splitting the company can resolve the issues.

According to Buffett, Greg Abel, who will succeed him as CEO of Berkshire Hathaway at the end of this year, also expressed disappointment regarding Kraft Heinz. A week ago, Kraft Heinz and Abel discussed that they had been studying the split for a long time, and Abel told them at that time that he would feel disappointed if the company proceeded with this plan.

According to media reports, Buffett said:

"We will continue to do everything we believe is in the best interest of Berkshire. If someone offers us to sell shares, we will not accept a collective buyout offer unless that offer has been made to other Kraft Heinz shareholders."

Buffett's statement reflects the legendary investor's concerns about Kraft Heinz's business prospects.

As the largest shareholder of Kraft Heinz, Berkshire Hathaway holds a 27.5% stake in the company and has never sold any shares since facilitating the merger in 2015. In 2019, Buffett publicly acknowledged a judgment error in his investment in Kraft Heinz, and Berkshire Hathaway recorded an impairment loss of about $3 billion on that investment that year

The Split Aims to Resolve Growth Dilemmas

Although Buffett poured cold water on it, the leadership of Kraft Heinz has shown strong support for the merger.

Kraft Heinz Chairman Miguel Patricio stated:

“The complexity of our current structure makes it extremely challenging to allocate capital effectively, prioritize projects, and scale in the most promising areas. By splitting into two companies, we can allocate appropriate attention and resources, unlocking the potential of each brand.”

CEO Carlos Abrams-Rivera emphasized during Tuesday's analyst conference call that simply having "scale is not enough." The split will ensure that the company remains focused as it moves forward while maintaining the scale necessary for market competition.

The decision to split Kraft Heinz stems from ongoing performance pressures. Shortly after the merger, the company's U.S. sales began to decline as health-conscious consumers reduced their purchases of packaged foods. Analysts have also attributed the company's difficulties to excessive cost-cutting measures, which left Kraft Heinz lacking the financial support needed to invest in its brands at critical times.

To turn the business around, Kraft Heinz has sold assets such as Planters nuts and parts of its cheese business, and has increased investment in brands like Lunchables and Capri Sun.

Restructuring Wave in the Food Industry

Kraft Heinz's split is not an isolated case in the industry. In recent years, several food and beverage companies have undergone similar business restructurings, including Kellogg's split into two companies in 2023 and Keurig Dr Pepper's recent announcement to reverse its 2018 merger of coffee and beverage businesses.

In 2023, Kellogg Company spun off its cereal business into WK Kellogg Co., while snack brands including Pringles and Cheez-It were formed into Kellanova. Both companies are currently set to be acquired by private firms, and analysts predict that Kraft Heinz's new business unit may face a similar fate.

Mars announced in August 2024 that it would acquire Kellanova for nearly $36 billion, while Italian candy manufacturer Ferrero International agreed in July to acquire WK Kellogg for an enterprise value of $3.1 billion.

Food companies are also facing pressure from U.S. Secretary of Health and Human Services Xavier Becerra. He urged Americans to reduce their consumption of ultra-processed foods and called on producers to stop using artificial colorings. Against the backdrop of increasing consumer health awareness and tightening government regulations, the U.S. food industry is undergoing profound transformation