Food & Beverage

Kraft Heinz suggests it may be ready for another acquisition

Key Points
  • Investors and analysts have been closely watching to see what Kraft Heinz's next acquisition will be.
  • Some have questioned whether Kraft Heinz's relentless cost-cutting model works long term without acquisitions.
  • Kraft Heinz CEO Bernardo Hees said Friday that valuations are more attractive and noted the integration of its acquisition of Kraft is now behind the company.
Bottles of Heinz Tomato Ketchup
Getty Images

Kraft Heinz CEO Bernardo Hees suggested Friday that the timing may soon be right for the ketchup giant's eagerly anticipated next acquisition.

"I think ... it's fair to say that valuations today are more attractive than they were even two months ago and the chapter of Kraft Heinz integration is behind us," Hees said.

He underlined that Kraft Heinz continues to be attracted to companies with strong brands, international reach and scale.

Kraft Heinz reported earnings and sales on Friday that missed expectations, as attention continues to swarm the company and questions continue to linger regarding its long-term strategy. Kraft Heinz, which is backed by 3G Capital, is a renowned cost-cutter that has left some impressed with its ability to squeeze profits, and others questioning whether it has capability to grow brands.

Its model has led most onlookers and investors to believe that Kraft Heinz can only grow through acquisitions, in which it can buy new fat to cut in order to increase its earnings.

But it has been more than two years since Kraft Heinz's last deal, its acquisition of Heinz in 2015. Kraft Heinz attempted to acquire Unilever early last year, but the deal leaked and Unilever appeared to be put off by Kraft Heinz's now infamous cost-cutting approach to management.

Kraft Heinz has in recent weeks been particularly vocal about its corporate strategies, including a "post integration business update" on its Kraft Heinz deal, in which the company focuses on its sustainability efforts, fight against world hunger and community efforts.

"What we see in this presentation [is a] sign that Kraft wants to transact, [but] can't find anyone that is willing to sell to it and now wants to re-invent its image so that sellers see it as a more hospitable landing spot," analysts at Gordon Haskett said Friday.

Kraft Heinz was trading at $68 a share on Friday, lows not seen since August 2015.