Packaged-food giant Kraft Heinz said on Tuesday, September 2, that it will separate into two firms, dividing up famous brands including Philadelphia cream cheese and cold-cut brand Oscar Mayer.
The company, which was born in a 2015 merger between two longstanding American food brands, said splitting in two will allow better targeted investments to maximize brand value, according to a Kraft Heinz press release.
"By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance," said Miguel Patricio, executive chair of the board for Kraft Heinz.
But shares of the food company fell sharply after major holder Berkshire Hathaway signaled its disagreement with the announcement. Berkshire Hathaway CEO Warren Buffett said he was "disappointed" by the decision to split up the companies, pointing to $300 million in transaction costs and questioning the rationale of dividing the assets up, CNBC reported.
Buffett had helped orchestrate the original union between Kraft and Heinz a decade ago, which was billed as a way to enable both US and international growth through brands such as Heinz Ketchup, Kraft Macaroni & Cheese, Maxwell House coffee and Oscar Mayer hotdogs.
But Kraft Heinz sales have struggled in recent quarters amid weak demand for some core food items.
In May, Berkshire Hathaway representatives stepped down from the Kraft Heinz board. Berkshire, which holds 27.5% of Kraft Heinz shares, also accounted for an $3.8 billion writedown of its investment in Kraft Heinz.
Under the plan announced Tuesday, Kraft Heinz CEO Carlos Abrams-Rivera will become chief executive of North American Grocery Co., whose brands will include Oscar Mayer, Kraft Singles and Lunchables.
The board is working with a global executive search firm to identify CEO candidates for the Global Taste Elevation Co., which will include the brands Heinz, Philadelphia and Kraft Mac & Cheese, Kraft Heinz said in the press release.