Kraft to Spin Off Into Two

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Kraft to Spin Off Into Two


NORTHFIELD, Ill. -- The Board of Directors of Kraft Foods Inc. intends to create two independent public companies: a high-growth global snacks business with estimated revenue of approximately $32 billion, and a high-margin North American grocery business with estimated revenue of approximately $16 billion. The company said it expects to create these companies through a tax-free spinoff of the North American grocery business to Kraft Foods shareholders.

The intent is for each business to focus on its distinct strategic priorities, with financial targets that best fit its own markets and unique opportunities.

"As our second-quarter results once again show, our businesses are benefiting from a virtuous cycle of growth and investment, which we fully expect will continue," said Kraft Foods Chairman and CEO Irene Rosenfeld. "We have built two strong, but distinct portfolios. 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."

Global snacks will consist of the current Kraft Foods Europe, as well as the North American snacks and confectionery businesses. Key brands will include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee and Tang powdered beverages.

The North American grocery business will consist of the current U.S. Beverages, Cheese, Convenient Meals and Grocery segments and the non-snack categories in Canada and Foodservice. Key brands will include Kraft macaroni and cheese, Oscar Mayer meats, Philadelphia cream cheese, Maxwell House coffee, Capri Sun beverages, Jell-O desserts and Miracle Whip salad dressing.

The company is in the process of developing detailed plans for the board's further consideration and final approval. The current target is to launch the new companies before year-end 2012. The company will provide interim updates as appropriate.