Kraft Heinz Decides Its Problems Are 'Fixable'

Kraft Heinz is shelving its breakup plan. New CEO Steve Cahillane said Wednesday the company is halting work on splitting in two so it can focus fully on restoring profitable growth, calling many of its problems "fixable and within our control." The surprising move—only about 10% of corporate spinoffs are abandoned, per Reuters—comes just five months after Kraft Heinz announced plans to unwind much of the $46 billion merger that joined Kraft and Heinz a decade ago. Shares fell about 7% in premarket trading on the news, per CNBC. The company had planned to complete the split this year. The pause will reportedly save about $300 million in costs.

Instead of dividing, Kraft Heinz will pour $600 million into its US business, targeting marketing, sales, research and development, and what Cahillane described as "product superiority and select pricing." The packaged-food giant has struggled for years with weakening US sales and brand write-downs for names like Oscar Mayer and Maxwell House. Warren Buffett, who orchestrated the original merger, had previously expressed disappointment over the breakup plan, with his Berkshire Hathaway holding company planning to sell off its 28% stake in the company. Wednesday's update came as the company reported falling sales for a ninth straight quarter, with revenue below expectations, per the Wall Street Journal.