Kraft Heinz splits up ten years after their merger; "matchmaker" Buffett: Disappointed by the breakup, shares at one point fell over 7%.

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The Kraft Heinz merger spearheaded by Buffett ten years ago has ended in a split. This "Oracle of Omaha" expressed disappointment this Tuesday at Kraft Heinz's decision to split, believing that breaking up the company will not solve its fundamental problems. The company's stock price plummeted.

On Tuesday, September 2, Eastern Time, Kraft Heinz shares opened lower and kept falling, with early trading dropping as much as 7.1% before the decline narrowed to under 7%. The drop is set to wipe out nearly two months of gains and refresh the lowest closing price since July 7. As of last Friday’s close, Kraft Heinz’s stock price had dropped nearly 9% since the beginning of the year, far underperforming the broader market, while the S&P 500 index rose over 9% in the same time.

On Tuesday, Kraft Heinz announced it would split into two independent listed companies, officially ending the $46 billion merger deal led by Buffett’s Berkshire Hathaway and 3G Capital in 2015. As the largest shareholder with 27.5% of the shares, Berkshire has never reduced its Kraft Heinz holdings since the 2015 merger.

The split plan separates Kraft Heinz into two parts: one company focusing on sauces, condiments, and shelf-stable meals with annual sales of $15.4 billion; the other includes Oscar Mayer, Kraft cheese slices, and Lunchables and other North American grocery brands, with annual revenue of $10.4 billion. The deal is expected to complete in the second half of 2026.

Buffett Candidly Expresses Disappointment, Says Split Is Not the Solution

Media reported on Tuesday that Buffett said he was disappointed with the idea of splitting Kraft Heinz and also disappointed that shareholders would not get to vote on the company's future development.

Buffett admitted the merger deal a decade ago didn’t turn out well. The Kraft and Heinz merger "wasn’t a brilliant idea." He stated that although the merger did not achieve the expected success, he does not believe that splitting up the company will solve the problem. Buffett admitted this, but he does not think splitting the company is the answer.

According to Buffett, Greg Abel, who will succeed him as Berkshire Hathaway CEO at the end of this year, also expressed disappointment with Kraft Heinz. A week ago, Kraft Heinz discussed the split with Abel, and he told them if they went ahead, he would be disappointed.

According to media reports, Buffett said:

"We will continue to do whatever we believe is in Berkshire’s interest. If someone approaches us to sell our shares, we will not accept a collective tender offer unless the offer has also been made to other Kraft Heinz shareholders."

Buffett’s comments reflect the legendary investor’s concern about the business prospects of Kraft Heinz.

As Kraft Heinz’s largest shareholder, Berkshire Hathaway holds 27.5% of the company’s shares and has never sold any shares since facilitating the merger in 2015. In 2019, Buffett publicly admitted a misjudgment in the Kraft Heinz investment, with Berkshire recording an impairment loss of about $3 billion that year.

Split Aims to Resolve Growth Dilemmas

Despite Buffett raining on their parade, Kraft Heinz leadership showed strong support for the merger.

Kraft Heinz Chairman Miguel Patricio said:

"The complexity of our current structure makes effective capital allocation, prioritizing projects, and scaling in the most promising areas extremely challenging. By splitting into two companies, we can give proper attention and resources to unlock each brand's potential."

CEO Carlos Abrams-Rivera emphasized on Tuesday’s analyst call that "scale alone is not enough". The split will ensure the company maintains focus as it moves forward, while retaining the required scale for market competition.

Kraft Heinz’s decision was driven by ongoing performance pressures. Not long after the merger, U.S. sales began to decline, as more health-conscious consumers reduced purchases of packaged foods. Analysts also blamed the company’s woes on excessive cost-cutting, making it short of funds to invest in its brands when it needed it most.

To turn things around, Kraft Heinz has sold assets like Planters nuts and parts of its cheese business, while increasing investment in brands like Lunchables and Capri Sun.

Wave of Restructuring Sweeps Food Industry

Kraft Heinz’s split is not unique in the industry. In recent years, several food and beverage companies have undergone similar restructuring, including Kellogg, which split into two companies in 2023, and Keurig Dr Pepper, which recently announced it would unwind its 2018 coffee and beverage merger.

In 2023, Kellogg split its cereal business into WK Kellogg Co. and formed Kellanova for snack brands such as Pringles and Cheez-It. Both are currently set to be acquired by private companies, and analysts predict Kraft Heinz’s new business units may face a similar fate.

Mars announced in August 2024 it would acquire Kellanova for nearly $36 billion, and Italian confectioner Ferrero International agreed in July to purchase WK Kellogg at an enterprise value of $3.1 billion.

Food companies also face pressure from Health and Human Services Secretary Robert F. Kennedy Jr., who has urged Americans to reduce consumption of ultra-processed foods and demanded producers stop using artificial colors. Amid growing health consciousness among consumers and tightening government regulations, the U.S. food industry is undergoing profound restructuring.

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