Kraft Heinz food company is halting its efforts to split into separate companies, choosing instead to focus on fixing its business challenges with a $600 million investment.
CEO Steve Cahillane said in a statement that many of the company’s issues are “fixable and within our control.”
“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 and we will no longer incur related dis-synergies this year.”
Kraft Heinz plans to invest $600 million to fuel a turnaround of its U.S. business. The company plans to use the amount for marketing, sales, and research and development. The investment will also go toward “product superiority and select pricing,” according to Cahillane.
Kraft Heinz had announced plans to split up last September, reversing much of the blockbuster $46 billion merger from a decade which made the company one of the biggest in the food industry.
Berkshire Hathaway Chief Executive Officer Greg Abel recently began reducing the conglomerate’s 28% investment in Kraft Heinz, but that could change, however 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. Callihane, who took up the top role in January, said the company 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.
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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.”