Kraft Foods to split into two companies

Eighteen months after acquiring Cadbury in a hostile takeover, Kraft Foods Inc today said that it  intends to create two independent public companies focussing on a snacks business with revenue of $32 billion and a North American grocery business with a revenue of around $16 billion. 

Kraft expects to create these companies through a tax-free spin-off of the North American grocery business to Kraft Foods shareholders, latest by the end of the year and expects the final separation of the businesses to take approximately 12 months with the current target to launch the new companies being by end of 2012.

However, the break up is subject to regulatory approvals and a favorable ruling from the Internal Revenue Service to ensure the tax-free status of the spin-off of the North American grocery business to Kraft shareholders.

"We have built two strong, but distinct, portfolios," said chairman and CEO Irene Rosenfeld.

Rosenfeld said, "Our strategic actions have put us in a position to create two great companies, each with the leadership, resources and strong market positions to realise their full potential.

Since its acquisition of Cadbury, it has built a global snack foods platform that differs in future strategic priorities from and the high-margin North American grocery business, requiring individual growth profiles and operational focus for the two businesses.