Portfolio

Kraft Foods, Inc. (2007 – 2010 and 2011 – 2012)

From 2007 to 2012, Kraft Foods, Inc. (“Kraft”) was the largest food company in the U.S. and the second largest food company in the world.

 

Second Investment (2011 – 2012)

 

Trian believed the size and complexity of Kraft post-2010 was difficult to manage, and the solution was to create two distinct public companies: a unique global snacks business with strong prospects for growth and emerging markets exposure, and a slower growth North American-centric grocery business with leading brands and free cash flow generation. In the spring of 2011, Trian presented its white paper to management, outlining its investment thesis and operational and strategic initiatives for the company. Trian announced its second investment in Kraft in June 2011.

In August 2011, Kraft announced that it would split into a global snacks company (Mondelēz International) and a North American grocery business (Kraft Foods). On October 1, 2012, Mondelēz International announced the completion of the spinoff of Kraft Foods. On October 2, 2012, the independent companies began trading on NASDAQ under the symbols “MDLZ” and “KRFT,” respectively. Trian sold its remaining stake in Kraft Foods in November 2012.

 

First Investment (2007 – 2010)

 

In 2007, Kraft’s margins were well below its peers and its stock price had consistently underperformed since its IPO in 2001. Trian believed value could be added through margin expansion and portfolio changes to improve focus and simplify the business. Specifically, Trian recommended the purchase of Cadbury as a catalyst to separate into a growth-oriented snacks business and a slower growth, high cash flow grocery business.

Trian announced its first investment in Kraft in July 2007. In the summer of 2007, Trian met with Kraft management to discuss how to improve performance and increase shareholder value. Kraft made several strategic portfolio enhancements during this investment period, including the purchase of Danone’s biscuit and cookie business in late 2007, the tax-free sale of Post Foods cereal business in early 2008, and the landmark purchase of Cadbury in early 2010. The combined Kraft-Cadbury became a global confectionary company. Trian exited its first investment in Kraft in late 2010.

Sector: Consumer

Company Website: http://www.kraftheinzcompany.com/