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Wall Street wasn’t impressed. The stock cratered 7% the same day the plan went public.
Wall Street Already Knew
This isn’t new. Rumors of a split had been swirling ever since Kellogg pulled off a wildly successful breakup in 2023. That move unlocked value, sparked acquisitions, and left investors smiling.
But here’s the catch: Kellogg’s split made sense. They separated their booming snack division from their struggling cereal unit. Investors could see the winners clearly — and buyers lined up.
Kraft Heinz? Not so much. Executive Chairman Miguel Patricio admitted on the analyst call, “the split is not between a good company and a bad company.” Translation: there’s no clear winner here, just two average divisions now carrying double the overhead.
Buffett Calls Out the Gimmick
Buffett knows this company well. His Berkshire Hathaway engineered the Kraft-Heinz merger back in 2015. When CNBC asked him about the split, the Oracle of Omaha didn’t sugarcoat it.
He called the whole maneuver “disappointed” and warned, “he does not think that taking the company apart will fix its problems.”
When Warren Buffett is shaking his head at your “strategy,” you’ve got a serious credibility issue.
Two Companies, Twice the Cost
Here’s the kicker. Running two firms instead of one will add about $300 million in extra costs each year. That’s real money for a business generating barely over $3 billion in annual cash flow.
And let’s be honest — the “North American Grocery” side is stuck with brands like Oscar Mayer and Maxwell House, both on long-term life support. Kraft Heinz tried to unload Oscar Mayer last year and couldn’t find a buyer. Now they expect investors to get excited about it as a standalone company?
Meanwhile, “Global Taste Elevation” looks a little shinier, but not enough to fetch the kind of valuations executives are dreaming about. Even worse, the companies aren’t positioned as attractive takeover targets.
Same Problems, New Packaging
At the end of the day, Kraft Heinz didn’t solve a single issue. They just rearranged their divisions, slapped on new labels, and doubled their operating expenses.
Investors wanted a bold separation — winners vs. losers. What they got was a geographic shuffle that makes a mess even harder to manage.
Buffett made his billions buying companies with solid fundamentals, not those dressing up weak numbers with fancy PowerPoints. When he says your plan is “disappointing,” that’s a flashing red warning sign.
Corporate America still doesn’t get it: you can’t paper over bad fundamentals with slick restructuring. Shareholders aren’t fooled, and neither is Warren Buffett.
And unless Kraft Heinz fixes its real problems, this “split” is nothing more than rearranging deck chairs on the Titanic.
