AB Foods to demerge Primark after review, shares fall

(Sharecast News) - Associated British Foods on Tuesday said it planned to demerge its Primark retail clothing business from its food operations and list both entities in London after a review with its largest shareholder.

The Weston family's Wittington Investments, AB Foods' largest shareholder, said it would retain majority ownership of both entities.

AB Foods shareholders will hold shares in both companies. Primark, which provides more than half of the conglomerate's profit, has 486 stores globally across 19 markets with approximately �9.5bn of annual revenue and more than 83,000 employees.

The foods business includes the Ovaltine, Patak's, Blue Dragon Ryvita and Twinings brands, along with a major sugar division and agriculture operations. The group expects to split before the end of 2027, with one-off separation costs of about �75m.

"This is an important step in the evolution of ABF. For our food business, the separation will enable greater understanding of the breadth and strength of our differentiated portfolio and its long-term growth opportunities as the only FTSE100 pure play food producer," said AB Foods chief executive George Weston.

"For Primark, it enables the creation of appropriate governance to maximise the future potential offered by Primark's powerful brand, strong customer proposition and opportunities in existing and new markets."

Confirmation of the spinoff came as AB Foods posted a 19% fall in adjusted pre-tax profits to �663m for the six months to February 28 and held its outlook for the full year. In January the company cuts its profit outlook due to weaker performances at Primark and US ingredients operations. Shares in the company were down 4% in early London trade.

Reporting by Frank Prenesti for Sharecast.com

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