Key takeaways 

• Kraft Heinz is exploring options to get smaller following other food industry realignments driven by shifting tastes and pricing pressure.
• Honeywell International, Warner Bros. Discovery, and other companies have announced splits this year in bids to unlock value.
• Corporate breakups are rarely quick transactions and can often take several months or longer to complete.

As some companies get smaller and refocus, investors can be better informed by understanding the strategy and structure behind the moves.

Bigger isn’t better for some companies. While 2025 is shaping up to be a banner year for mergers and acquisitions, some large corporations are seeing a clearer path to growth and profits by pulling themselves apart.¹

Consumer foods giant Kraft Heinz is the latest big name mulling its options in a year that has seen announced splits by Honeywell International, Warner Bros. Discovery, and other companies.² 

Each breakup is different, but the underlying rationale is often similar. Some big companies are looking to become smaller, more focused businesses — and shed unprofitable or slower-growth units along the way — in a bid for greater market flexibility, to attract new investors, and to unlock value.³ 

Such breakups are often driven by activist investors and others who believe that parts of a large company are worth more on their own — often called a conglomerate discount.⁴

Food industry rethinks value 

Kraft Heinz — itself created in a 2015 merger — reiterated July 30 that it’s exploring several realignment options.⁵ Some news reports have focused on a potential $20 billion spin-off of its grocery business, including packaged food brands like Kraft and Oscar Mayer. The remaining company would focus on faster-growing sauces and condiments including Heinz ketchup and Grey Poupon mustard.⁶

In addition to changing consumer tastes and health trends, large food companies are facing pressure from shoppers who are wary of higher prices and increasingly hunting for deals or store-brand alternatives.⁷

Kellogg Company broke up in 2023, keeping popular brands like Pringles, Cheez-It, Nutri-grain bars, and Eggo waffles under a renamed company, Kellonova.⁸ The North American cereal business — facing increased competition from bars, yogurts and other breakfast alternatives — was spun off and renamed WK Kellogg.⁹

Such breakups can sometimes make the smaller companies more attractive acquisition targets. Kellonova was sold to candymaker Mars in 2024 for about $30 billion and WK Kellogg was acquired just last week by Italian candy maker Ferrero for $3.1 billion.¹⁰

Read more: Momentum behind large-scale M&A deals is growing

Honeywell looks at GE playbook 

A potential Kraft Heinz breakup would follow several other high-profile breakups in 2025 and earlier.¹¹

Industrial conglomerate Honeywell International announced plans in February to separate into three independent companies by 2026, focused on aerospace, automation, and advanced materials.¹²

The move follows General Electric’s 2024 split into GE HealthCare Technologies, GE Vernova, and GE Aerospace — a breakup that has quadrupled GE’s combined market value compared to its 2022 levels.¹³

Auto supplier Aptiv announced in January that it would split into two companies, separating its technology-focused operations, which includes autonomous driving and other advanced applications, from its electrical systems business that it sells to EV manufacturers and other carmakers.¹⁴

In June, Warner Bros. Discovery said it’s pursuing a split that would separate higher-growth streaming businesses from cable operations by 2026. One company would focus on streaming and studio assets like HBO Max and Warner Bros., while the other would be centered around cable networks like CNN and TNT Sports.¹⁵

Traditional channel surfing has shifted, with more than 60% of people identifying a streaming platform as their “most used” TV setup. There’s also been a steady decline in cable and satellite TV spending, with the average monthly spend falling 23% since 2020, according to Empower research.

Read more: Screen time: Televisions redefine household hubs

What investors need to know 

Corporate breakups are rarely quick transactions — they often take several months or longer to finalize. GE’s breakup took well over 2 years to complete after it was announced in 2021.¹⁶

Spin-offs are one of the most popular ways to break apart companies because of tax advantages. In those transactions, shares of the newly formed company are distributed to existing stock holders on a pro rata basis.¹⁷

In Kellogg Company’s breakup, shareholders were given one share of WK Kellogg for every four shares of Kellanova, which kept 82% of the Kellogg Company’s portfolio while its stock was listed under the old company’s K symbol after the name change.¹⁸

Spin-offs can be tax-free to the company if certain conditions are met. One of the most important criteria is the parent company relinquishing control of at least 80% of the shares in a subsidiary.¹⁹

Other forms of breakups include:

• Split-offs, where shareholders are given the choice to exchange parent company shares for shares in the subsidiary. Some companies may pursue a split-off over a spin-off because a split-off gives stockholders an option to participate.²⁰
• Equity carve-outs, where a parent company sells a portion of a division through an IPO to raise capital while maintaining control — often used as a step toward a full spin-off.²¹

Understanding how breakups work is important for investors because each type of transaction can have a different impact on taxes, control, and long-term value. For example, spin-offs are typically tax-free for shareholders, but once completed, investors must decide whether to hold or sell the new shares — decisions that can have capital gains tax consequences.²²

Corporate breakups also take time to play out. While some, like GE’s, have delivered strong returns for investors, others might not perform as well or take longer to show conclusive results.²³

As companies face pressure to get smaller and refocus on core strengths, investors can be better informed by understanding the strategy and structure behind the moves.

Read more: Ways to avoid or minimize capital gains tax