Brief

Kraft Heinz's M&A plans focus on a target with global brands

Dive Brief:

  • Bernardo Hees, Kraft Heinz’s CEO, was asked what type of acquisitions would make sense for Kraft Heinz in an interview with The Wall Street Journal. He told the paper Kraft Heinz wanted a company with “brands that cannot only be in a specific market, but can be traveling and can be creative platforms.”
  • Kraft Heinz’s operating profit margin increased 6.5% last year, from 16.5% a year earlier, on a pro-forma basis.
  • The company’s partnership with Oprah Winfrey takes effect in the third quarter of 2017, a move expected to increase its value.

Dive Insight:

When Kraft Heinz Co.’s $143 billion offer to acquire Unilever was rejected in March, the rumors started swirling about what 3G Capital’s next big acquisition would be. Brazilian private-equity firm 3G Capital Partners, a big player in the U.S. food industry, and Warren Buffett-owned Heinz helped orchestrate the condiment maker's 2015 merger with Kraft.

Analysts believe Kraft Heinz is keeping its eyes on other companies, with another big merger expected to be announced later in 2017. Kraft Heinz CEO Bernardo Hees was not shy in answering the question posed to him by The Wall Street Journal, saying the company was looking for “brands that cannot only be in a specific market, but can be traveling and can be creative platforms.” Those remarks shed light on the thinking behind the company's failed effort to purchase Unilever.

PepsiCo and its rising snack business could be something that interests Kraft Heinz. The company has the global reach it desires and can not only operate in a specific market, but has numerous segments that would interest the company. The Colgate-Palmolive Company is another potential target, and one some analysts have said makes sense. It potentially rules out companies such as Kellogg, General Mills or Campbell Soup — three companies in the slumping packaged foods space with large U.S. operations. Regardless, it's only a matter of time before Kraft Heinz announces a deal, and that could trigger further consolidation among other food manufacturers as well.

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Filed Under: Manufacturing Grocery Ingredients Corporate
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