Yahoo Finance Kraft Heinz may be cooking up more big deals
Just a few months before he hits his two-year mark as CEO, Kraft Heinz's Miguel Patricio has his executive team in place, sales and profits finally going in the right direction and two big deals done and dusted.
And perhaps, a few more deals waiting in the wings.
"We have to look at our portfolio in a very agile way. I think that food is one of these industries that changes fast. If you think back to the way you were eating 10 years ago and the way you are eating today, it's very different," Patricio told Yahoo Finance Live.
Patricio added, "You can expect us to be much more agile on portfolio management. That will always mean acquiring and divesting a product. So i am not working on any specific divestiture, but it can happen in the future the same way we can acquire other businesses."
As of late, Patricio has been in the selling mood rather than an acquisitive one as he focuses on paying down debt and investing in stronger brands at Kraft Heinz.
Last week, Kraft Heinz announced it would sell its Planters nut business to Hormel for $3.35 billion.
That marriage has long been rumored. Hormel has a strong position in the nut butter market with well-known brands Skippy and Justin’s. Adding Planters brings Hormel more into the nut snacking occasion with an ingredient it already uses a great deal, Hormel CEO Jim Snee told Yahoo Finance Live. The transaction also brings Hormel into the snacking business overall as the Planters business also includes the Cheez Balls and Corn Nuts brands.
As for Kraft Heinz, Planters was no longer viewed as a key asset.
The Planters deal follows Patricio's first asset sale in September 2020, where it unloaded its natural cheese business to Lactalis for $3.2 billion.
Kraft Heinz shares are up 36% in the past year, making it one of the better performing packaged food stocks during the COVID-19 pandemic. In large part, the stock's gain reflects Wall Street's view that Patricio isn't yet done wheeling and dealing.
"While management has not discussed specific assets, we think it’s likely the company will contemplate additional divestitures, especially considering the relatively strong 15x EBITDA multiple it was able to fetch on Planters, above where KHC shares are valued today," said Guggenheim Securities analyst Laurent Grandet. "We continue to think that the sale of the off-strategy Maxwell House or baby food business in Europe would be additional positives for the stock."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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