Feb. 11 (UPI) — The Kraft Heinz food company is halting its effort to split into separate companies and instead is focusing on fixing its business challenges with a $600 million investment.
Kraft Heinz Chief Executive Officer Steve Cahillane, in a prepared statement, on Wednesday said the company won’t move forward with its prior plan to split into separate Kraft and Heinz business entities.
“My number one priority is returning the business to profitable growth, which will require ensuring all resources are fully focused on the execution of our operating plan,” he said.
“As a result, we believe it is prudent to pause work related to the separation,” Cahillane added, “and we will no longer incur related dis-synergies this year.”
He said the opportunity to fix business problems is bigger than anticipated and the problems are controllable.
Cahillane became the top executive at Kraft Heinz in January and said it will focus on investing in marketing, sales, research and development to produce “superior” products with “select pricing.”
He said Kraft Heinz has a robust balance sheet due to “disciplined stewardship” and will continue to generate excess revenues while executing its new business plan.
The move scraps the company’s recent plan to break up the business that was created via a $46 billion merger in 2015 to create one of the world’s largest food company, CNBC reported.
Berkshire Hathaway was among investors in the newly created Kraft Heinz business, but founder Warren Buffett has expressed disappointment with the prior decision to split the company into two entities once again.
Berkshire Hathaway Chief Executive Officer Greg Abel recently began reducing the conglomerate’s 28% investment in Kraft Heinz, but that could change.
“We support CEO Steve Cahillane and the Kraft Heinz Board of Directors’ decision, under Steve’s new leadership, to pause work on the company’s previously planned separation,” Abel said in a statement.
“As a result, management can commit to strengthening Kraft Heinz’s ability to compete and serve customers,” he said.
Kraft Heinz Board Chairman John Cahill said Cahillane’s “deep industry experience and proven track record of building brands and leading large-scale transformations” already is producing significant benefits.
“From day one, he has brought a fresh, consumer-first perspective that we believe creates a clear glidepath back to profitable growth,” Cahill said.
“We are confident that our decision to pause the work related to the separation and fully focusing our resources in service of growth is the right move at this time. We remain excited about the road ahead for Kraft Heinz.”
COMMENTS
Please let us know if you're having issues with commenting.