Kraft Foods said today it plans to split into two publicly traded companies, an international snacks business including Cadbury, Oreo and Trident, and a North American grocery business with Kraft Macaroni and Cheese, Oscar Mayer, Philadelphia, Maxwell House, Jell-O and other non-snack brands.
The company is aiming to finalize the split by the end of next year through a tax-free spin-off of the North American grocery business to shareholders.
"We have built two strong, but distinct, portfolios," Chairman-CEO Irene Rosenfeld said in a statement. "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 next phase of our development recognizes the distinct priorities within our portfolio. The global snacks business has tremendous opportunities for growth as consumer demand for snacks increases around the world. The North American grocery business has a remarkable set of iconic brands, industry-leading margins, and the clear ability to generate significant cash flow."
The snacks business would have revenue of $32 billion, including 75% from snacks sold globally and 42% in developing markets, the company said. The North American grocery business would be valued at $16 billion in estimated revenue, making it "one of the largest food and beverage companies in North America," the company said.
Kraft said it is making the move after a review showing that "these two businesses would now benefit from being run independently of each other, rather than as part of the same company." Each unit will "focus on its distinct strategic priorities, with financial targets that best fit its own markets and unique opportunities," the company said.