On October 8, 2019, the Honorable Robert M. Dow, Jr., United States District Judge for the Northern District of Illinois, appointed KTMC as Co-Lead Counsel in a class action lawsuit filed against The Kraft Heinz Company (“Kraft Heinz” or the “Company”) (Nasdaq: KHC). On January 6, 2020, KTMC filed a Consolidated Complaint against Kraft Heinz and other Defendants which, among other things, expanded the original class period and included claims on behalf of Kraft Heinz options purchasers. Click here to view a copy of the Consolidated Complaint.
Alleged Wrongful Conduct
The claims in this securities fraud class action arise from Defendants’ materially false and misleading statements and omissions concerning the most important question investors had for Kraft Heinz’s executives during the Class Period: whether the Company’s cost-cutting initiatives following the 2015 acquisition of Kraft Foods Group, Inc. (“Kraft”) by The H.J. Heinz Company (“Heinz”) (the “Merger”) were “sustainable,” i.e., was Kraft Heinz achieving the outsized savings it repeatedly touted solely by eliminating waste and redundancy, and was the Company investing those savings to further brand growth? Defendants’ answer to these questions was repeatedly and unequivocally, “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. In the short time since the Merger took place, through undisclosed extreme and indiscriminate cost-cutting to the Company’s supply chain and brand investment, certain 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 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 Defendant Bernardo Hees (“Hees”), Chief Financial Officer David Knopf (“Knopf”), and several other high-ranking Kraft Heinz executives.
After the end of the Class Period, Hees’s successor, Miguel Patricio, finally admitted to investors that, since the Merger and unbeknownst to the market, Kraft Heinz had been suffering from double-digit losses in its global supply chain. Notwithstanding Hees’s and other executives’ reassuring statements throughout the Class Period that Kraft Heinz was vigorously focused 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 organic growth.” As these facts emerged, Kraft Heinz’s stock price plummeted, causing the loss of billions of dollars in shareholder value.
Plaintiffs allege violations of the federal securities laws by several high-ranking Kraft Heinz executives as well as against the private equity entities which created Kraft Heinz in July 2015 and engineered Heinz’s acquisition of Kraft. Plaintiffs allege that because of the Company’s misrepresentations, the price of Kraft Heinz’s shares traded at artificially-inflated levels during the Class Period.
On August 14, 2020, Kessler Topaz filed an amended complaint.
If you traded Kraft Heinz common stock and/or stock options between November 5, 2015 and August 7, 2019 and would like to learn more about the litigation, please fill out our online form or contact us today by phone at 888-299-7706 or by email at info@ktmc.com