The Kraft Heinz Company: A Merger Gone Wrong?

Case Code: BSTR595 Case Length: 19 Pages Period: 2015-2019 Pub Date: 2020 Teaching Note: Available

Price: Rs.500 Organization : Kraft Heinz Company Industry :Food & Beverage Countries : United States; Canada; India Themes: M&A/ Operational Synergy/ Bankruptcy & Turnaround Management/Operational Synergy

Abstract

The case “The Kraft Heinz Company: A Merger Gone Wrong?” talks about the reasons for and the probable debacle of the merger between Kraft Foods Group, Inc. (Kraft) and H. J. Heinz Company (Heinz). In 2015, Kraft and Heinz merged to form The Kraft Heinz Company (Kraft Heinz). The case starts out by mentioning the reasons that led to the merger’s orchestrators, Warren Edward Buffett’s (Buffet) Berkshire Hathaway Inc. (BH) and private equity firm 3G Capital (3G), going in for the merger. The case then documents the expectations of the stakeholders from the merger. Later, the case describes in detail the actions taken by Kraft Heinz following the merger such as brutal cost cutting measures and laying off of employees, which led to a crisis. The case then takes a brief look into the measures taken by the newly appointed Chief Executive Officer (CEO) Miguel Patricio (Patricio) to revive the sinking profits of Kraft Heinz given his previous successful track record. It remains to be seen whether Patricio can successfully pull Kraft Heinz, the world’s fifth-largest food and Beverage Company, out of the quagmire.

Issues

The case is structured to achieve the following teaching objectives:

• Analyze the motivation behind mergers
• Identify the impact of a zero-based budgeting model
• Investigate the synergies derived out of mergers
• Examine the issues that lead to the failure of mergers
• Scrutinize the role of leadership in the success of M&As
• Study the operating synergy theory
• Assess the importance of cultural compatibility in making mergers successful

Contents

INTRODUCTION
BACKGROUND NOTE
THE RATIONALE FOR THE MERGER
THE MERGER AND ITS FALLOUT
PROBLEMS CROP UP
WHAT WERE THE REAL PROBLEMS?
THE ROAD AHEAD
EXHIBITS

Keywords

Merger; Integration; Post-merger Issues; Competition; Kraft Heinz; Acquisitions; Theories of Mergers; Operating Synergy; Increasing Value of the Organization; Leadership in M&A; Mergers from Marketing Perspective; Economic Rationale; Strategic Realignment; Role of Major Shareholders; Zero-based budgeting model

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