Warren Buffett: says he’s disappointed by breakup of Kraft Heinz

Warren Buffett: says he’s disappointed by breakup of Kraft Heinz

In a significant development for the food industry, Kraft Heinz Co. has announced its decision to split into two separate, publicly traded companies. The move, which comes after years of speculation and strategic consideration, has sparked reactions from various quarters, including a notable expression of disappointment from Warren Buffett, Berkshire Hathaway's CEO. Here are the key details and implications of this major corporate restructuring.

Kraft Heinz, formed through a merger in 2015 with the backing of Warren Buffett and Brazilian private-equity firm 3G Capital, is set to break up into two entities. The first, tentatively named "North American Grocery Co.," will focus on North American staples such as Oscar Mayer meats, Lunchables, and Kraft Singles. The second, dubbed "Global Taste Elevation Co.," will concentrate on global brands like Heinz ketchup, Kraft Macaroni & Cheese, and Philadelphia cream cheese. The spinoff is expected to be completed by the end of 2026 [1].

Buffett, who owns a more than 27% stake in Kraft Heinz, expressed his displeasure with the split. In an interview with CNBC, he stated that he is "disappointed" with the decision to break up the company. Despite owning a significant portion of the company, Buffett does not currently hold a seat on the board [2]. The split is seen as an attempt to free up each business to thrive independently, potentially leading to better performance and value creation for shareholders [1].

The decision to split Kraft Heinz comes after several years of financial struggles, including a decline in U.S. sales due to health-conscious consumer trends and cost-cutting measures. The company has also been investing in some of its brands, such as Lunchables and Capri Sun, to try and turn around its fortunes [3]. The split is expected to generate cost savings of up to $300 million, with clear opportunities to mitigate a substantial portion of these costs in the near term [1].

The stock market's reaction to the news has been mixed. Kraft Heinz's stock fell 0.9% in premarket trading on Tuesday following the announcement. However, the broader market indices, such as the S&P 500, have shown resilience, with the index rising 208.9% since the day before the original merger was announced [1].

Buffett has stood by Kraft Heinz despite acknowledging that the merger didn't turn out to be a brilliant idea. He has stated that Berkshire Hathaway will do whatever is in the best interest of the firm and will not accept a block bid unless other shareholders receive the same offer [3].

The breakup of Kraft Heinz is a significant event in the corporate world, highlighting the complexities of mergers and the challenges faced by conglomerates in maintaining their competitive edge. As the spinoff process unfolds, investors and financial professionals will closely monitor the developments to assess the potential impact on the company's performance and shareholder value.

References:
[1] https://www.morningstar.com/news/marketwatch/2025090246/big-warren-buffett-backed-merger-calls-it-quits-as-kraft-heinz-announces-breakup
[2] https://stocktwits.com/news-articles/markets/equity/warren-buffett-disappointed-kraft-heinz-split/chv6uIdRdFP
[3] https://www.cnbc.com/2025/09/02/warren-buffett-says-he-is-disappointed-in-kraft-heinz-split.html