Heinz Shakes Up Kraft Management Ahead of Buffett-Backed Merger

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Heinz CEO Bernardo Hees
Heinz ceo and the future ceo of Kraft at the opening of the H.J Heinz Co. exhibition in Pittsburgh on Sept. 5, 2014. Photographer:Keith Srakocic/AP

H.J. Heinz’s leadership is wasting no time shaking up Kraft Foods Group Inc.

The companies announced a raft of management changes Monday ahead of their planned merger, which is scheduled to go to a shareholder vote this week. Departures will include Kraft Chief Financial Officer James Kehoe and General Counsel Kim Rucker, according to a statement that named the executive team for the combined company.

Heinz CFO Paulo Basilio will hold the same position at the new Kraft Heinz Co., which will lean heavily on the ketchup maker’s executives to fill the most-senior roles.

“Our new leadership team represents the best of the best in business,” Bernardo Hees, Heinz’s chief executive officer and the future CEO of Kraft Heinz, said in the statement. “I am thrilled that this world-class group of executives will join me to further strengthen our iconic brands.”

The changes echo an overhaul that Hees led at Pittsburgh-based Heinz two years ago after Warren Buffett’s Berkshire Hathaway Inc. and investment firm 3G Capital took over the ketchup maker. Within weeks of that deal’s closing, top executives departed and the new management team went to work cutting employees and costs from corporate headquarters to the factory floor.

The belt-tightening has helped Heinz produce some of the best margins among large U.S. food companies as the industry struggles with slow growth. It also helped justify the combination with Northfield, Illinois-based Kraft, which was engineered by 3G and Berkshire.

Trimming Costs

The companies have said they expect to wring $1.5 billion of annual costs out of their combined businesses by the end of 2017. Kraft shareholders are scheduled to vote on the merger on July 1.

When the deal is completed, Eduardo Pelleissone will be executive vice president of global operations; Matt Hill will be zone president for Europe; and Marcos Romaneiro will oversee the Asia Pacific region. All have similar jobs at Heinz.

Kraft Chief Operating Officer George Zoghbi is the most senior manager from that company to be named to the new leadership team. He’ll be COO of the U.S. commercial business. Kraft executives including Joe Fragnito and Howard Friedman will report to him.

Other Kraft executives agreed to stay at the combined company for the next few months. Diane Johnson May, executive vice president of human resources at Kraft, will remain until December. Tom Corley, executive vice president of U.S. sales at Kraft, will stay until November, the companies said.

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