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Kraft to split into two

Split to help investors in a large way to capitalise on the growing snack business

August 05, 2011  |  comments ( 0 )  | 
Kraft to split into two

18 months after driving through the controversial acquisition of U.K. chocolate maker Cadbury, Chief executive Irene Rosenfeld plans to break up the food giant, Kraft Foods into two separate companies. The split will give investors the chance to bet on a snacks business that is growing fast in emerging markets, or opt for the stable dividends offered by a slower-growing general grocery business that includes Oscar Mayer lunch meat and Kraft cheese.


The surprise move by the $48-billion company is the latest in a broad trend of corporate breakups that includes Fortune Brands Inc., ConocoPhillips and ITT Corp. The move also comes just weeks after billionaire investor Nelson Peltz disclosed a 12-million share stake in Kraft through his firm Trian Fund Management.


The CEO, who is looking forward to playing a leadership role once the transaction is done, said she and the board have been considering a split for several years, and that now is finally a good time.


Both Peltz and Warren Buffett, Kraft’s largest shareholder with a nearly six-per-cent stake, support the split.


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