Kraft Foods: Doing a Split
by Mike Karfakis on August 8, 2011
One company will sell candy and snacks like Oreo cookies, Cadbury chocolates and the Tang beverage-like orange powder. A second piece would hold Kraft’s North American grocery brands such as Oscar Mayer, Jell-O and Philadelphia cream cheese. Don’t ask us why Jell-O products are not considered a snack. For a more complete list of what your favorite foods will be considered, check out this list. Moving on.
The sudden decision to split into two publicly traded companies is Chief Executive Irene Rosenfeld's second bold step in transforming Kraft. Last year, Kraft paid billions to acquire Cadbury PLC to become the second-largest food company in the world.
Now, 18 months later, Kraft says it has two classes of brands that can be better managed separately: a fast-growing snacks business with global growth potential and a slower growing grocery business in North America that will pay striking surpluses.
"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," Rosenfeld said in statement.
The company expects to conduct the split before year-end 2012, with a tax-free spin-off of the North American grocery business to shareholders. We think it will be interesting to follow the branding differences Kraft chooses as the effects of this announcement unfold.
Overall, as long as nothing happens to my beloved Chips Ahoy! cookies, I’ll be okay. Ah, lunchbox memories. What was your childhood snack of choice, and do you still indulge?
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