Kraft Foods to create two independent companies
September 1, 2011
Kraft Foods board of directors intends to create two independent companies: a high-growth, global snacks business with estimated revenue of about $32 billion and a high-margin North American grocery business with estimated revenue of about $16 billion. Expected to be completed in about 12 months, these companies will be created through a tax-free, spin-off of the North American grocery business.
“We have built two strong, but distinct portfolios,” says Kraft Foods Chairman and CEO Irene Rosenfeld. “Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realize their full potential.”
The company believes creating two public companies will offer a number of opportunities:
• Each business will focus on its own distinct strategic priorities, with financial targets that best fit its own markets and opportunities.
• Each will be able to allocate resources and deploy capital in a manner consistent with strategic priorities.
• Investors will be able to value the two companies based on their particular operational and financial characteristics and invest accordingly.
Global snacks will consist of the current Kraft Foods Europe and developing markets units as well as the North American snacks and confectionery business. The North American grocery business will consist of the current US beverages, cheese, convenient meals and grocery segments and the non-snack categories in Canada and food service. The grocery business will have a highly competitive retail presence, cost leadership and a continued commitment to innovation and marketing excellence, says Kraft.