Kraft Foods Inc (NYSE:KFT) said on Friday the US Internal Revenue Service (IRS) had given its consent to the tax-free spin-off of its North American grocery business to shareholders.
After the separation, announced last August, the North American grocery business will operate as an independent, publicly traded firm under the name Kraft Foods Group Inc.
Dave Brearton, Kraft’s CFO and executive vice president, welcomed the IRS ruling saying the group is on track to launch the two new companies before the end of this year.
The remaining global snacks business, which makes the other publicly traded company, generates annual revenues of some USD32bn (EUR25.2bn), while the North American grocery unit has sales of around USD16bn, Kraft has said, adding that the break-up would allow each of the businesses to pursue their growth freely.
The group views the planned split as the next logical step in its development, expected to enhance performance and generate increased long-term shareholder value, Kraft Foods said in August 2011.
The spin-off is still subject to a number of conditions, including the execution of related inter-company agreements and the final approval from the board of Kraft Foods Inc, the company said today.
With a portfolio of snacks including biscuits, confectionery, beverages, cheese, grocery products and convenient meals, sold in around 170 countries globally, Kraft Foods Inc made revenues of USD54.4bn last year.