Kraft Heinz Poised to Separate as Intended Benefits From Its 2015 Merger Fail to Materialize

The merger of Kraft Heinz failed to generate a durable improvement in sales and profitability. As such, management now intends to separate the business into two independent, publicly traded companies: sauces, spreads, and seasonings ($15.4 billion in annual sales) and North American grocery ($10.4 billion). Despite the increased focus that management claims this affords, we fail to see how this enhances its competitive position or financial prospects. In our view, the motivation leans more toward unlocking a higher multiple for the faster-growing condiments business once it's unencumbered by the more mature North American grocery brands.