Kraft Heinz Explores Sale of Oscar Mayer
Famed hot-dog business could fetch between $3 billion and $5 billion
The Deal
Kraft Heinz KHC 0.69%increase; green up pointing triangle is looking to sell Oscar Mayer, the big maker of hot dogs, cold cuts and bacon.
The Details
Kraft Heinz recently tapped Bank of America and Centerview Partners to gauge interest in the business, which could fetch something in the neighborhood of $3 billion to $5 billion, people familiar with the matter said. It’s possible there won’t be any transaction.
It’s not clear who might be interested, but potential buyers for a business like this tend to range from private-equity firms to other food-industry players.
The Rationale
Under new CEO Carlos Abrams-Rivera, Kraft Heinz is working to rejigger its portfolio as consumer interest in health and nutrition grows. It’s part of a bid to light a fire under a stock that’s done little in the past five years. The company currently has a market capitalization of about $44 billion.
Kraft Heinz is in the midst of a multiyear effort to improve the nutrition of supermarket staples like its ketchup and juice drinks, aiming to offer healthier options amid rising concern over ultra-processed foods, obesity and chronic diseases linked to diet.
The Context
The company this month reported quarterly results that disappointed investors as demand for some of its products cooled and it grapples with higher input prices. Kraft Heinz doesn’t routinely provide details of Oscar Mayer’s performance, but the company has been working to recover market share losses in cold cuts linked with supply-chain challenges.
Kraft Heinz, which makes grocery-store staples including Lunchables, Maxwell House, Jell-O and Velveeta, last August named Abrams-Rivera CEO after he did a short stint running the company’s North American operations. (He started his career at a Kraft Heinz predecessor before working at Mondelez International and Campbell Soup.)
Rivera has said he’s committed to making the company’s products healthier, in part by cutting sodium and sugar.
Oscar Mayer was once a cultural mainstay, thanks in part to its famous jingle: “Oh, I wish I were an Oscar Mayer Wiener…”