Buffett Says He’s “Disappointed” as Kraft Heinz Moves to Split — Shares Slide About 7%

Buffett Says He’s “Disappointed” as Kraft Heinz Moves to Split — Shares Slide About 7%

Warren Buffett said he was “disappointed” on Tuesday after Kraft Heinz announced it will split into two publicly traded companies — a move meant to simplify operations but one that prompted a sharp market reaction and fresh questions about whether breaking up the decade-old merger can fix the company’s deeper problems. Kraft Heinz shares fell roughly 7% on the news.

What Kraft Heinz announced

Kraft Heinz said in a regulatory filing and press release that it will separate its business into two independent, publicly traded companies — one focused on sauces, spreads and other global “taste” brands and the other on slower-growth North American grocery staples. The company said the split would be executed as a tax-free spin-off and is expected to complete in the second half of 2026; Chief Executive Carlos Abrams-Rivera will lead the grocery-focused company while a search is under way for a leader of the remainder. Management framed the move as a way to reduce complexity and allow each business to pursue tailored strategies.

Buffett’s reaction

Buffett — whose Berkshire Hathaway is the company’s largest shareholder, with about a 27.5% stake — told CNBC he was disappointed the board decided to press ahead with the split and said that while the 2015 merger he helped engineer “was not a brilliant idea,” he doubts the breakup by itself will fix the firm’s long-running operational and growth challenges. Berkshire has not sold down its stake.

Market reaction and investor concerns

Investors sold the stock sharply after the announcement and Buffett’s comments; Reuters reported the share decline at about 7% in Tuesday trading as traders digested both the strategic reset and Buffett’s public reservations. Analysts cautioned that a breakup can unlock value for some companies but warned it does not automatically solve core issues such as sluggish organic growth, margin pressure and changing consumer tastes away from processed foods. 

Why management pushed for the split

Kraft Heinz said the company faces complexity from running nearly 200 brands across dozens of categories and markets, which executives argued has constrained investment and agility. CEO Carlos Abrams-Rivera told reporters and investors the division would let each new company make clearer choices about pricing, marketing and supply chains — and could sharpen management accountability and capital allocation. The company reiterated it expects to maintain aggregate dividend levels during the separation process and to target investment-grade credit ratings for each resulting firm. 

Legacy of the 2015 merger

The split effectively undoes, in part, the megamerger that Berkshire Hathaway and Brazil’s 3G Capital orchestrated a decade ago. What was billed as a transformational tie-up instead left Kraft Heinz saddled with persistent sales weakness, repeated earnings downgrades and a series of charges and impairments over the years. Buffett has previously acknowledged mistakes around valuation and integration; Tuesday’s comments were an unusually public expression of frustration with the company’s chosen remedy. 

Analysts: breakup may help, but won’t cure growth issues

Market strategists said the split could create more focused management teams and allow investors to value each business more distinctly — a classic rationale for corporate separations. But several analysts noted that Kraft Heinz’s problems are largely operational and consumer-facing: brands need product innovation, better marketing, and distribution agility to halt share losses. “Structural change can be constructive, but separating a slow-growth grocery arm from a sauces and specialty portfolio doesn’t by itself fix product relevance or pricing power,” one consumer-goods analyst told Reuters. 

Financial and operational risks ahead

Executing a complex spin-off carries costs and transitional risks. The company will need to sort out shared services, supply-chain contracts, credit arrangements and tax and regulatory clearances. There is also the risk that one or both of the new companies may be assigned lower valuations if investors remain unconvinced about turnaround plans — and credit markets could demand a premium if lenders view the separated entities as riskier than the combined firm. Kraft Heinz said it expects to continue paying the current dividend through the separation process, a detail the company highlighted to reassure income-focused shareholders. 

Analysis — why Buffett’s disappointment matters

Buffett’s public disappointment is more than a headline: his views shape investor psychology, especially for a company in which Berkshire remains the largest shareholder. Three takeaways matter:

1. Signalling effect. Buffett’s scepticism signals to long-term value investors that the split is not a guaranteed fix. Even if the break-up creates clearer strategic focus, the heavy lifting — restoring brand momentum, stopping volume declines and improving margins — still falls to management teams that must execute in a tough consumer environment. 

2. Governance and accountability. The split follows the departure of certain Berkshire representatives from the board and broader shareholder impatience. Turning a combined behemoth into two public companies could enhance governance if activist pressures and board oversight compel faster, more transparent action — but it can also scatter accountability if transitional frictions persist. 

3. Value vs. reality. Separations can unlock value on paper — distinct multiples for faster-growing versus steady cash-flow businesses — but markets reward companies that show credible, sustained operational improvement. Absent a credible path to revive organic sales, the re-rating investors hope for may not arrive. Buffett’s comment raises the bar: he has been blunt in the past about overpaying for bargains; his doubt suggests investors should demand clearer evidence that the split will be accompanied by tangible execution gains. 

What to watch next

• Investor calls and guidance: details from upcoming investor presentations on separation timing, transitional services and cost savings assumptions. 

• Board composition and governance moves: whether the company names a separate CEO for the sauces/spreads business quickly and whether Berkshire or other large holders press for board changes. 

• Credit-market reaction: rating-agency commentary on the likely ratings for each spun company and any impact on borrowing costs. 

• Operational milestones: clear evidence of product innovation, marketing investment, or early market share stabilization that would indicate the split is more than cosmetic.