Kraft Heinz to divest North American coffee business for $650 million

Kraft Heinz announced Wednesday that it will divest its North American coffee business in a deal that values the business at $650 million on an enterprise basis, as it works to refocus on its core brands.

Transaction Details

The deal with private equity firm One Rock Capital Partners includes brands such as Maxwell House, Gevalia, Nabob, Yuban, Tassimo, Ethical Bean, and Sanka. The transaction is expected to close in mid-2027, subject to regulatory approval and other customary closing conditions, according to a news release from Kraft Heinz.

Kraft Heinz will retain a 30% non-controlling equity stake in the business. The sale is expected to include:

• Assets, brands, customer support, and functional resources needed to operate the business independently.
• Coffee manufacturing facilities in Jacksonville, Florida, and Vancouver, British Columbia.
• Approximately 250 full-time employees across supply chain, sales, marketing, finance, people and performance, and R&D.

Kraft Heinz expects to receive approximately $500 million in post-tax cash proceeds from the transaction, which it intends to use to pay down debt.

Corporate Strategy and Financial Outlook

The divestiture is part of a broader effort by CEO Steve Cahillane to prioritize resources toward areas where the company can accelerate growth. Cahillane, who joined the company in January, previously called off plans to split the company in two. He stated that the problems Kraft Heinz faced were "fixable and within our control."

In its third-quarter earnings report, Kraft Heinz reported that net sales declined 2% to $6.1 billion, with organic net sales declining 1.1%. The company noted that volumes fell 1.1 percentage points, with North America reporting a 2.4 percentage point drop. Kraft Heinz attributed these volume declines to price hikes implemented to offset higher input costs from tariffs, packaging expenses, and war-related transportation costs.

Kraft Heinz raised its 2026 outlook, now anticipating organic net sales to be down between 0.5% and 1.25%, an improvement from the second-quarter projection of a decrease as much as 2%.

"Our 2026 operating plan to turn around the U.S. business and accelerate growth internationally is on track," Cahillane said.

Advisor and Market Reaction

Rothschild & Co and Centerview Partners are serving as financial advisers to Kraft Heinz, with McGuireWoods providing legal counsel. Deutsche Bank Securities and Fifth Third Securities are advising One Rock, while Latham & Watkins is serving as its legal counsel.

Following the announcement, shares of Kraft Heinz were up approximately 5% on Wednesday morning.

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Sources

• cnbc.com: Kraft Heinz to divest North American coffee business in $650M deal
• foodengineeringmag.com: Kraft Heinz to Divest North American Coffee Business for $650M | Food Engineering
• massmarketretailers.com: Kraft Heinz to divest North American coffee business
• citybiz.co: Kraft Heinz to Sell North America Coffee Business to One Rock Capital Partners for $650M | citybiz
• centraloregondaily.com: Kraft Heinz to divest North America coffee unit amid CEO turnaround efforts  | Consumer | centraloregondaily.com

This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.