If reports are to be believed, Kraft Heinz could be about to make another major move in the reshaping of its business.

It would be wrong to say the US giant has solely shedded assets in recent years. Businesses in Brazil and Turkey have been added to the portfolio.

However, the larger, perhaps more notable, moves (certainly for historical reasons), have been made on the other side of the ledger: think the disposals of the Planters snacks business to Hormel Foods in 2021 and, a year earlier, the sale of much of Kraft Heinz’s cheese assets to dairy giant Lactalis.

The Planters and cheese deals marked a significant reworking of Kraft Heinz’s business in North America, with the company seeking to reduce its presence in lower-margin, more commoditised areas.

Reports in the US in recent months have suggested the Lunchables and Ore-Ida brand owner is weighing up another move of that ilk. A report by Reuters last week indicates, if true, those plans have moved forward.

In May, The Wall Street Journal said Kraft Heinz was reportedly exploring a sale of its Oscar Mayer business, having hired financial advisors to work on the process.

The publication reported that Kraft Heinz had brought in Bank of America and Centerview Partners to gauge interest in the hot dogs, bacon and ham business.

That process appears to be now at the stage of indicative bids, with Reuters reporting last week Brazil-based meat giant JBS is among possible suitors to have tabled initial offers. Citing unnamed sources, the news agency named Sigma Alimentos, the Mexico-based meats and dairy group, as another to have sent in a bid.

Approached by Just Food for comment, none of Kraft Heinz, JBS nor Sigma Alimentos had responded at the time of writing.

Kraft Heinz does not disclose specific sales figures for business units. The WSJ report in May, again citing unnamed sources, said a sale could bring in between $3bn and $5bn. Reuters’ sources suggested the assets could change hands for “nearly” $3bn. Kraft Heinz is looking to attract bids of around ten times the asset’s EBITDA of roughly $290m, the sources told Reuters.

With no official comment from Kraft Heinz, it’s worth noting, of course, there is no certainty a deal will materialise. However, given the company’s recent track-record of disposals and the reports from different sources, it wouldn’t be a surprise if a sale does happen. Among the Wall Street analysts covering Kraft Heinz, there is a belief a sale would be good news for the company’s prospects.

The price tag mooted “seems a reasonably decent multiple for a business that has struggled with competitive dynamics in cold cuts as Kraft Heinz is not backward integrated in meat processing”, Bernstein analyst Alexia Howard wrote in a note to clients.

She added: “As such, this deal seems to make a good deal of strategic sense. It will enable Kraft Heinz to shed an underperforming part of the portfolio and a meat processing player could benefit from more stable and higher margin branded business.”

Internally, Kraft Heinz has shuffled its assets into three groups dubbed ‘accelerate’, ‘protect’ and ‘balance’.

At the CAGNY investment conference in Florida in February, Kraft Heinz outlined the attributes of each group. The ‘balance’ side of the business – which also includes the remaining cheese assets and coffee (Kraft Heinz has reportedly tried to offload some coffee assets in the past) – was said to enjoy “high” market shares but margins were deemed to be “low” in “flat” categories. Private-label was also described as “high, with exposure to commodity-driven volatility”.

The company said it was “priortising growth and investment” in its ‘accelerate’ portfolio, which includes its ketchup, baked beans and snacks.

In a note on Thursday after the Reuters report, TD Cowen analyst Robert Moskow referenced Kraft Heinz’s comments at CAGNY.

“At its CAGNY presentation in February, management said that they expect the ‘Balance’ platform of its portfolio to play a smaller role in the company in the future,” he said. “The platform mostly consists of Oscar Mayer meats, Maxwell coffee, and Kraft Velveeta Sliced Cheese. We view this strategy as a positive, given that the company tends to perform best when it focuses on value-added convenience for the consumer and distances itself from the commodity food itself.”

He added: “We would view a divestiture as another positive step in the company's effort to reduce its exposure to commodity-linked categories with slow growth and high private label exposure.”

A sale, then, is seen to favour Kraft Heinz. But what about potential buyers?

JBS, the world’s largest beef processor, is no stranger to buying assets the company believes can offer opportunities to sell more ‘value-added’ products. Nor for that matter is Sigma Alimentos, which markets meat and dairy products in North America. It also has assets in the processed-meats sector in Europe.

Moskow says it’s “logical” JBS and Sigma would bid for Kraft Heinz’s Oscar Mayer assets.

“JBS’s US strategy is to increase its sales mix of processed and prepared proteins to improve its margins because fresh beef margins are below break-even at this time,” Moskow said. “Sigma has been distributing Oscar Mayer in Mexico since 1993 and also has a small US presence under hot dog brands such as Bar-S. Sigma would generate cost savings from ceasing royalty payments to KHC for the Oscar Mayer brand and increase their scale in the US.”

At Bernstein, Howard pondered whether the price Kraft Heinz ultimately gets could end up higher than that sketched out in the Reuters report.

“While this business is less attractive than it was a decade ago, as competitive dynamics have worsened, Oscar Mayer is a leading brand in the cold cut and hot dog space – remember the bidding war for Hillshire Brands back in 2014?” she said. “One might argue that since Hillshire Brands is now firmly ensconced in the Tyson portfolio, Oscar Mayer would be an even more scarce asset for the remaining meat processing companies.”