The Kraft Heinz Co.
Lead Plaintiff Deadline: 05/25/2020
SUMMARY OF CASE:
A securities class action has been filed against The Kraft Heinz Co. (KHC) on behalf of itself and all other persons or entities who purchased or otherwise acquired securities of the Kraft Heinz during the period between July 2, 2015 through November 4, 2015. This case has been filed in the USDC – N.D.IL.
The Complaint alleges Defendants’ made materially false and misleading statements and omissions concerning the most important question investors had for Kraft Heinz’s executives: whether the Company’s cost-cutting initiatives planned for and immediately following the 2015 acquisition of Kraft Foods Group, Inc. (“Kraft”) by The H.J. Heinz Company (“Heinz”) (the “Merger”) were “sustainable,” i.e., would Kraft Heinz be able to achieve the outsized savings it repeatedly touted prior to and in the months following the Merger solely by eliminating waste and redundancy, and would the Company invest those savings to further brand growth and longterm value? Defendants assured investors that the answer to that question was “yes.”
Accordingly, investors were stunned when, in February 2019, Kraft Heinz announced a historic $15.4 billion write-down in the value of the Company’s Oscar Mayer and Kraft trademarks and other intangible assets. Beginning immediately following the Merger, when Defendants first implemented their plans to employ extreme and indiscriminate cost-cutting to the Company’s supply chain and brand investment, the Individual Defendants debased the value of the Company’s historic brands by as much as 50%. The Company then announced investigations by the SEC and Department of Justice (“DOJ”) into Kraft Heinz’s accounting and procurement practices, restated years of financial statements due to widespread misconduct in its procurement division, and fired Chief Executive Officer (“CEO”) Defendant Bernardo Hees (“Hees”), Chief Financial Officer (“CFO”) David Knopf (“Knopf”), and several other high-ranking Kraft Heinz executives.
In August 2019, Hees’ successor, Miguel Patricio, finally admitted to investors that, because of practices first implemented immediately following the Merger and unbeknownst to the market, Kraft Heinz had been suffering from double-digit losses in its global supply chain. Notwithstanding Hees’ and other executives’ reassuring statements made in connection with the Merger and its immediate aftermath, and lasting until February 2019, that Kraft Heinz would vigorously focus on organic growth (as opposed to growth through acquisitions), Patricio admitted that the Company would have to undergo a “fundamental change” in order to finally “pursue organicgrowth.” As these facts emerged, Kraft Heinz’s stock declined, wiping out billions of dollars in shareholder value.