Altria Group’s board has voted to authorise the eagerly awaited spin-off of its 89% share in Kraft Foods.
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Altria said that by 30 March it would distribute approximately 0.7 of a share of Kraft for every share of Altria common stock, to shareholders of record as of 16 March.
Altria said that the separation of Altria and Kraft would “benefit both parties”. The group, which owns tobacco operator Marlboro, said the spin-off would enhance Kraft’s ability to make acquisitions, and allow the management of Altria and Kraft to focus more effectively on their respective businesses.
Following the spin-off, Kraft announced that Louis Camilleri would step down as its chairman but continue to serve on the company’s Board of Directors. Kraft CEO Irene Rosenfeld was elected as its new chairman, while it was announced that Dinyar Devitre and Charles Wall would also step down from the board.
The maker of Kraft cheese, Ritz crackers, Maxwell House coffee and Toblerone chocolates also posted a 17.4% fourth-quarter earnings decline yesterday (1 February), with US$624m profits limited by lower sales. Meanwhile, shares in the company rose 9 cents to close at $34.92 on the New York Stock Exchange.
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By GlobalDataAltria chairman and CEO Louis Camilleri said: “I am extremely pleased to announce the spin-off of Kraft today, a major step in our commitment, announced more than two years ago, to deliver superior shareholder value. I believe that an independent Kraft will enjoy enhanced flexibility to grow its business and be in a substantially stronger position to create enduring shareholder value.”
Kraft Foods CEO Irene Rosenfeld said: “The forthcoming spin-off from Altria will provide us with additional tools to enhance our growth. The new management team is ready for and looks forward to this exciting next stage in the history of Kraft Foods.”
Kraft’s net revenues for the fourth quarter declined 3.0% to $9.4bn. Strong results were generated by biscuits, meats, and powdered beverages in North America, chocolate in the EU, and by many categories in Latin America and Eastern Europe, the manufacturer said.
It said that a number of products performed well, including Oscar Mayer meats, Nabisco cookies and snack crackers in North America, Milka chocolate in the EU, Jacobs soluble coffee in Russia and Ukraine and Lacta chocolate in Brazil.
However, gains by these products were partially offset by product item pruning and the discontinuation of select product lines in the North America Foodservice and Canadian ready-to-drink beverage businesses. The company also posted share declines in Maxwell House coffee, Kraft salad dressings and Planters snack nuts, it said.
