Kraft is Splitting in Two

NORTHFIELD, Ill.Kraft Foods Inc. announced that its Board of Directors intends to create two independent public companies: A global snacks business with estimated revenue of approximately $32 billion, and a high-margin North American grocery business with estimated revenue of $16 billion.

"As our second quarter results once again show, our businesses are benefiting from a virtuous cycle of growth and investment, which we fully expect will continue," said Chairman and CEO Irene Rosenfeld. "We have built two strong, but distinct, portfolios. 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."

According to a press release, the company believes that creating two public companies would offer a number of opportunities:

Global snacks will consist of the current Kraft Foods Europe and Developing Markets units, as well as the North American snacks and confectionery businesses. Key brands will include Oreo and LU biscuits, Cadbury and Milka chocolates, Trident gum, Jacobs coffee, and Tang powdered beverages.

The North American grocery business will consist of the current U.S. Beverages, Cheese, Convenient Meals and Grocery segments, and the non-snack categories in Canada and Food Service. Its portfolio would include many popular food brands, including Kraft macaroni and cheese, Oscar Mayer meats, Philadelphiacream cheese, Maxwell House coffee, Capri Sun beverages, Jell-O desserts and Miracle Whip salad dressing.