Heinz executives to dominate post-merger management of Kraft Heinz Co.
Most of the top executives at Kraft Foods Group will head for the exits once the macaroni-and-cheese maker merges with H.J. Heinz Co., signaling that executives in Pittsburgh will be in control of the $28 billion food giant.
Kraft Heinz Co. will be led almost entirely by the Brazilian executives who run the Pittsburgh ketchup maker, the companies announced Monday, which raises questions about claims the combined company will maintain a co-headquarters in the Chicago area.
The companies said seven top Kraft executives will depart within 30 days of the deal closing — which is expected soon after shareholders vote on the deal Wednesday. Three others will leave this year after helping with a transition period.
“If I was a Kraft employee, I would be pretty nervous,” said Brian Yarbrough, an analyst with Edward Jones in St. Louis.
Brazilian investment firm 3G Capital, which partnered with billionaire investor Warren Buffett to buy Heinz in 2013, is known for extreme cost-cutting and shaking up management at the companies it acquires, Yarbrough said.
“This is just another play out of their playbook,” he said. “It’s not for sure, but with their track record of cost-cutting, I would be surprised if the company that is merging you still had two headquarters in a couple years.”
Heinz spokesman Michael Mullen, who was named senior vice president of corporate and government affairs at the combined company, declined to comment on what the executive appointments mean for Kraft’s operations in Northfield, Ill., a Chicago suburb.
“The immediate focus for the company’s senior leadership team will be to integrate the two businesses, establish the company’s new organizational structure and deliver business objectives for 2015,” he said. “As the organizational structure is determined, more details will be shared about where key leaders will be located.”
Heinz CEO Bernardo Hees, who previously was named chief executive of Kraft Heinz, will continue to make his home in Pittsburgh and will commute between the two cities, Mullen said. Kraft CEO John Cahill was previously named vice chairman of the board of the combined company.
According to the companies, Heinz leaders will fill the positions of chief financial officer, human resources chief, presidents for Europe, Asia and Latin America, and a region including Russia, India and the Middle East.
A Kraft lawyer was named general counsel of the combined company. And Kraft’s chief operating officer was named the head of the merged company’s U.S. operations.
“Our new leadership team represents the best of the best in business with proven track records for delivering results,” Hees said.
The merger of Kraft and Heinz, announced in March, would establish the world’s fifth largest food and beverage company. Buffett and 3G will own 51 percent of the combined company, which will be publicly traded, once the deal closes.
If the playbook of 3G Capital — seen after buyouts of Burger King and Heinz — are any indication, Kraft employees should be prepared for many significant changes, Yarbrough said. That includes layoffs, cuts to employee perks, open office plans that seat executives with everyone else, flights in coach instead of first class and other cost-cutting moves, he said.
Kraft employs 22,000 people in North America.
In the last two years, 3G has cut 7,400 jobs at Heinz, closed five of its manufacturing plants and produced savings of about $250 million a year. Heinz employs about 800 workers in Pittsburgh, down from about 1,200 before the deal.
“It is difficult for a lot of people to grasp the way they operate,” he said. “All of the sudden, it’s bare bones.”
Alex Nixon is a staff writer for Trib Total Media.