The Kraft Heinz Company (NASDAQ:KHC) will split into two separate publicly traded entities, a move its board of directors has unanimously endorsed.

The food giant believes this spin-off will sharpen focus on distinct business lines while simplifying operations.

The restructuring will form two scaled businesses, each designed to pursue tailored strategies and financial priorities.

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The new structure will divide Kraft Heinz into Global Taste Elevation Co. and North American Grocery Co.

The first will specialize in sauces, spreads, seasonings and ready meals, generating roughly $15.4 billion in 2024 revenue.

Its portfolio will include major brands such as Heinz, Philadelphia, and Kraft Mac & Cheese. Around 20% of its sales are expected from emerging markets and another 20% from away-from-home channels.

The second company, North American Grocery Co., will be led by CEO Carlos Abrams-Rivera.

It will oversee well-known brands such as Oscar Mayer, Kraft Singles, and Lunchables, accounting for $10.4 billion in 2024 revenue.

This segment will focus heavily on operational efficiency and steady cash flow, with three-quarters of sales coming from brands holding top spots in their categories.

Board Chair Miguel Patricio will serve as Executive Chair, helping oversee the transition.

The company also formed a Separation Committee headed by Vice Chair John Cahill, who previously led Kraft Foods Group.

Kraft Heinz emphasized that headquarters will remain unchanged, while a new CEO for the global division will be recruited.

Kraft Heinz executives argue the separation will allow capital to be allocated more precisely and eliminate structural complexity. Management expects both companies to maintain investment-grade credit ratings and continue paying dividends in aggregate.

While the company anticipates up to $300 million in separation-related dis-synergies, leaders are confident much of this can be offset in the near term.

The split, structured as a tax-free spin-off, is expected to be finalized in the second half of 2026, pending board approval and regulatory filings. Advisors Centerview Partners and law firms Paul, Weiss and Skadden are assisting with the transaction.

Carlos Abrams-Rivera, Kraft Heinz CEO, said, “This move will unleash the power of our brands and unlock the potential of our business.”

“Kraft Heinz’s brands are iconic and beloved, but 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, Executive Chair of the Board for Kraft Heinz. “By separating into two companies, we can allocate the right level of attention and resources to unlock the potential of each brand to drive better performance and the creation of long-term shareholder value. I look forward to working closely with Carlos and the Kraft Heinz team in the months ahead to prepare the organization for the separation.”

Price Action: KHC shares are trading higher by 0.29% to $28.05 at last check Tuesday.

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