Kraft Heinz Co (NASDAQ: KHC) is sinking this morning after announcing plans of a “split” that unwinds much of the mega-merger that legendary investor Warren Buffett engineered in 2015.
Naturally, the “Oracle of Omaha” is disappointed in the management’s decision. His conglomerate holding firm, Berkshire Hathaway, is currently the largest KHC shareholder with a 27.5% stake in the multinational food giant.
Including today’s decline, Kraft Heinz stock is down nearly 20% versus its year-to-date high.
Why Kraft Heinz split isn’t sitting well with Buffett
Buffett’s disapproval stems from a broader philosophical stance on long-term value creation.
In an interview with CNBC this morning, the influential investor agreed that Kraft Heinz merger didn’t live up to expectations, but said dismantling the company won’t necessarily solve its issues either.
“You don’t fix a mistake by making another one,” he implied. According to Buffett, the announced split signals a reactive strategy rather than a thoughtful turnaround.
He’s held Kraft Heinz shares since the merger, never trimming Berkshire’s stake, which makes the split feel like a repudiation of the original vision.
Buffett successor, Greg Abel, reportedly echoed the sentiment as well, expressing disappointment directly to Kraft Heinz leadership on Tuesday.
Why Kraft Heinz decided in favour of a split
Kraft Heinz’s decision to split its business into separate consumer and foodservice units reflects mounting pressure to unlock shareholder value and improve operational focus.
Such a move, it believes, could help streamline management, reduce complexity, and allow each segment to pursue tailored growth strategies.
The packaged food industry has faced headwinds from changing consumer preferences, inflationary pressures, and margin compression.
By separating its brands and distribution channels, Kraft Heinz hopes to become more agile and responsive.
While the company hasn’t detailed the full mechanics of the split, executives argue that the Kraft Heinz split will “better position each business for long-term success” – a claim that remains to be tested, though.
Should you invest in Kraft Heinz stock today?
Kraft Heinz split may offer short-term trading opportunities, but long-term investors should tread carefully.
Buffett’s skepticism isn’t just sentimental – it reflects concerns surrounding execution risk, brand dilution, and whether the split will truly unlock value.
Kraft Heinz still faces stiff competition, evolving consumer tastes, and margin pressures. While the breakup could lead to leaner operations, it also introduces uncertainty around leadership, strategy, and capital allocation.
For now, KHC shares remain under scrutiny. Investors should watch for clarity on the split’s structure, financial impact, and whether either entity can deliver sustainable growth. Until then, Kraft Heinz may be more of a wait-and-see than a buy-and-hold.
That said, Kraft Heinz stock does currently pay a rather lucrative dividend yield of more than 6.0%, which makes it appealing to income-focused investors as a long-term holding.
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