Kraft Heinz Reveals Plan to Merge U.S. and Canada Operations

The Kraft Heinz Company (KHC) has revealed its plans to merge its U.S. and Canada businesses to create the North America Zone, effective the second fiscal quarter of 2022. The company manufactures and markets food and beverage products.

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With this move, the company seeks to leverage its scale through improved agility for competitive advantage. Also, with the structural changes, Kraft Heinz expects to aid the strategic plan by streamlining and synergizing both businesses.

The combined business is expected to help the North America Zone pilot high-value products, processes, and service innovations, backed by the resources of the two countries while also increasing speed to market.

The company said the U.S. and Canadian businesses accounted for about 80% of its consolidated net sales in 2020. (See Kraft Heinz stock chart on TipRanks)

The newly created zone will house three commercial business units that will be later organized according to consumer-driven product platforms and geographic needs.

Kraft Heinz has also announced some leadership changes under which the new North America Zone will be led by Carlos Abrams-Rivera, who is the current U.S. Zone President.

The CEO of Kraft Heinz, Miguel Patricio, said, “Combining our U.S. and Canada businesses—two dynamic Zones—gives us a distinct advantage and will produce faster, more effective results so we can continue investing in our strategic plan and driving sustainable growth. While this is an evolution to our structure, it is part of a broader revolution in how we will work at Kraft Heinz going forward.”

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Stock Rating

Following the news, Guggenheim analyst Laurent Grandet downgraded the rating on Kraft Heinz to Hold from Buy with a price target of $33, which implies downside potential of 0.5% from current levels.

Consensus among analysts is a Hold based 5 unanimous Holds. The average Kraft Heinz price target of $38.20 implies upside potential of 15.2% from current levels.

Smart Score

Kraft Heinz scores a 6 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock is likely to perform in line with market expectations.