Who
benefits from giant corporate mergers?
Here’s a recipe for you: Chop
up some Oscar Mayer wieners, stir in Heinz ketchup, blend with Cool Whip and
Maxwell House Coffee, sprinkle Planters peanuts over the mixture, add A.1.
Steak Sauce, then top it with Cheez Whiz and blast it in the microwave.
Sounds like a gloppy mess. But
an even messier version was cooked up in 2015, when Kraft Foods merged with
H.J. Heinz, thus conglomerating more than 200 brand-name products — including
all of the above — into one $28 billion-a-year behemoth. The combination was
hailed at the time as a whiz-bang deal that would prove that bigger is always
better.
Uh… apparently not.
Four years later, Kraft Heinz’s
sales have slumped, profits are tumbling, its stock price has plummeted by half
in the last year, investors are bailing out, shareholders are suing, regulators
are investigating, employees are dispirited, and… well, as some business
journalists have put it, the mega-merger is a mega-mess.
The Kraft Heinz consolidation was engineered from outside by a Brazilian corporate takeover outfit named 3G, in cahoots with U.S. buyout buccaneer Warren Buffett.
They are ideological disciples of the old orthodoxy that the sole responsibility of corporate executives is to jack up the stock price and profits for big shareholders — in this case, themselves.
Their self-serving approach to
increasing Kraft Heinz’s profit was to squeeze “costs,” meaning squeezing out
experienced managers, workers, product development, and the vibrancy of the
corporation itself — which has steadily squeezed out their own profits.
This old model of
self-enrichment through corporate takeover, consolidation, and contraction,
turns out to be not just bad morals, but bad business. It’s time for us, the
media, and public officials to start saying no to merger mania.
OtherWords columnist Jim
Hightower is a radio commentator, writer, and public speaker. Distributed by
OtherWords.org.
