Kraft Heinz is planning a breakup: Report

Kraft Heinz is preparing to break itself up, the Wall Street Journal reported on Friday, at a time when the packaged food maker is grappling with persistent weakness in demand for its higher-priced brands.

The company is looking to spin off a large chunk of its grocery business, including many Kraft products, into a new entity that could be valued at as much as $20 billion on its own, the report said, citing people familiar with the matter.

The potential move would leave the company with housing goods such as sauces and spreads such as Heinz's namesake ketchup and Dijon mustard brand Grey Poupon.


Shares of the company were up 1.6% in afternoon trading.

Kraft Heinz declined to comment on the report, but referred to its May announcement of evaluating potential strategic transactions to unlock shareholder value.

The company was formed in 2015 after Warren Buffett's Berkshire Hathaway and Brazilian private equity firm 3G Capital combined the former Kraft Foods with H.J. Heinz, which they bought in 2013. But it has been a challenging investment for Berkshire.

Inflationary pressures and a shift in focus toward fresher, less processed food have hurt demand for the company's lunch combos and other products.

While the split is expected to be finalized in the coming weeks, the report said Kraft Heinz has explored alternative scenarios with its advisers and its board has yet to approve a final decision.

The company is also working on which brands it would be offloading into the new entity, the report said.

Kraft Heinz, similar to peers such as Conagra Brands , lowered its annual forecasts and reported a dour quarter in April hurt by muted consumer spending.