Kraft Heinz to split into 2 separate companies

Kraft Heinz Co. said Tuesday that it plans to split into two separate companies, undoing a mega-deal ushered in a decade ago that turned the maker of Kraft Mac & Cheese into one of the largest packaged food sellers in the world.

- BY KRISTINA PETERSON

JUSTIN SULLIVAN Getty Images KRAFT Heinz is seeking a CEO for one firm, a "global taste elevation company."

Following the breakup, one company will sell Heinz ketchup, other condiments and boxed meals that comprise its global brands with $15.4 billion in annual sales. The other fastest-growing firm will include slower-growing grocery products, such as Oscar Mayer hot dogs and Lunchables, which currently generate revenue of $10.4 billion.

Shares of Kraft Heinz fell as much as 5.5%, their biggest drop since Feb. 12. The stock has dropped about 14% this year, trailing a 9% gain in the S&P 500.

The goal of the split is to siphon off lagging grocery staples into a new entity expected to generate reliable cash flow, while giving the company's top-performing sauces and spreads more room to run. Executives said they expect each business will benefit from more focused attention after the split, which will occur through a tax-free spinoff. The two companies' names will be determined later.

"The complexity of our current structure makes it challenging to allocate capital effectively, prioritize initiatives and drive scale in our most promising areas," said Miguel Patricio, Kraft Heinz's chairman. "By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand."

Analysts said the longterm performance of both is uncertain given that consumers are shifting away from processed food.