The Kraft Heinz Company has announced its Board of Directors has unanimously approved a plan to separate the company into two independent, publicly traded companies through a tax-free spinoff.

Kraft Heinz says the separation – which comes a decade after the merger of Kraft Foods and H.J. Heinz – aims to maximize its capabilities and brands while reducing complexity, allowing both new companies to more effectively deploy resources toward their distinct strategic priorities.

The two resulting companies, whose names will be determined later, will include “Global Taste Elevation Co.,” a global leader in shelf-stable meals with approximately $15.4 billion in 2024 net sales, and “North American Grocery Co.,” a portfolio of North American staples with approximately $10.4 billion in 2024 net sales.

Global Taste Elevation Co. will include three billion-dollar brands – Heinz, Philadelphia and Kraft Mac & Cheese – with approximately 75% of net sales coming from sauces, spreads and seasonings. North American Grocery Co. will include three billion-dollar brands – Oscar Mayer, Kraft Singles and Lunchables. 

“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,” says 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.”

Carlos Abrams-Rivera will continue to serve as CEO of Kraft Heinz and will become CEO of “North American Grocery Co.” upon completion of the separation. Kraft Heinz’s board has been working with a global executive search firm to identify potential CEO candidates for “Global Taste Elevation Co.” Kraft Heinz has no plans to change its current headquarter locations.

“This move will unleash the power of our brands and unlock the potential of our business,” Abrams-Rivera says. “This next step in our transformation is only possible because of the commitment of our 36,000 talented employees who deliver quality and value for consumers every day. We will continue to operate as ‘one Kraft Heinz’ throughout the separation process.”

In May, Kraft Heinz announced the company’s Board of Directors and executive leadership team had been evaluating potential strategic transactions to unlock shareholder value. Following a thorough evaluation of potential strategic transactions, Kraft Heinz has determined that separating into two standalone companies offered the most compelling opportunity to unlock long-term value for all Kraft Heinz shareholders.

Miguel Patricio, the current Chair of the Board, will become executive chair. Patricio will work closely with Abrams-Rivera to prepare the organization for the separation. Patricio has served as chair of the board since May 2022 and was the company’s CEO from June 2019 to December 2023.

Kraft Heinz’s board has also formed a separation committee, led by John Cahill, to oversee the execution of the proposed separation. Cahill has served as vice chair of the board since July 2015, prior to which he served as chairman and COE of Kraft Foods Group, Inc. from 2014 to 2015 and Kraft’s executive chairman from 2012 to 2014.

Kraft Heinz anticipates up to $300 million of dis-synergies, with opportunities to mitigate a portion of these in the near term. The company expects the transaction to close in the second half of 2026. The transaction will follow the satisfaction of customary conditions, including final approval by the Kraft Heinz Board of Directors and receipt of a tax opinion with respect to the tax-free nature of the separation and effectiveness of appropriate filings with the U.S. Securities and Exchange Commission.

The move comes a week after Keurig Dr Pepper announced it would acquire JDE Peet’s for $18 billion and separate into a global coffee company and a refreshment beverage company.