ABF confirms it will spin off Primark from its food businesses
Associated British Foods has confirmed it will separate Primark from its food businesses through a demerger, ending months of speculation.On completion of the demerger, which is expected by the end of 2027, ABF shareholders will hold shares in both listed companies, with both expected to be constituents of the FTSE 100.The separation of Primark, which trades from 486 stores in 19 markets and generates more than half of ABF's profits, has seemed likely since the group launched a review of its structure last year.In preparation for the spin-off, ABF appointed Eoin Tonge as chief executive of Primark in March. The group has said that the financial markets have overlooked its food business for some time, while Primark now has the scale to go it alone. The review was conducted in consultation with ABF’s largest shareholder Wittington Investments, which remains committed to maintaining majority ownership of both Primark and the food business, which will keep the ABF name after the demerger. Split: ABF will spin off Primark from its food business by the end of 2027 Chief executive George Weston said: ‘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.‘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.’The budget retailer has suffered weaker sales growth in recent months amid a 'challenging consumer environment' and growing competition from Chinese rivals such as Shein. In a statement today, ABF said it is ‘confident’ in the long-term prospects of both businesses and 'maximise long-term returns for shareholders'. Duncan Ferris, investment writer at Freetrade said: 'Now, with consumer spending vulnerable amid rekindled inflationary pressures, the retailer will be going it alone in a challenging environment. 'Given the security offered by the FoodCo’s dependable cash generation, investors could be forgiven for questioning whether a split is truly the best way for Primark to recapture its magic.' It came as ABF reported a two per cent fall in revenue in the 24 weeks to 28 February to £9.7billion. Pre-tax profits fell 9 per cent to £632million. Weston said he expects costs related to the Middle East conflict to be 'manageable' but 'there is a risk to Primark sales' if the conflict persists. ABF shares fell 5.7 per cent to 1,777.5p at the opening bell. DIY INVESTING PLATFORMSAJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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ABF confirms it will spin off Primark from its food businesses
