Associated British Foods has confirmed plans to demerge Primark from its food business, in a landmark move that will see shareholders handed stakes in two separately listed companies.
The FTSE 100 group said its board had concluded that separating the retail and food operations was the best way to unlock long-term shareholder value, after completing a strategic review of the business structure first announced in November.
On completion of the demerger, ABF shareholders will own shares in both Primark and the remaining food business, which will retain the Associated British Foods name.
Chair Michael McLintock said the board had decided a split was the right route given Primark’s scale and the need for investors to better understand the food side of the group.
He said: “The Board has now completed its in-depth review of the structure of ABF and has concluded that a demerger of Primark is the best way to maximise long-term returns for shareholders, reflecting Primark’s scale today and the need for a better understanding of the food business.”
Chief executive George Weston described the move as “an important step in the evolution of ABF”.
He added: “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 FTSE 100 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.”
ABF said the demerger would allow both businesses to operate with boards and governance structures more closely aligned to their individual markets, while also giving investors a clearer view of each company’s growth profile and priorities.
Primark enters the split as a substantial international retailer, with 486 stores across 19 markets and annual revenue of around £9.5bn. ABF said its strengths lie in its value-led proposition, global brand recognition, product development capabilities and scope for further expansion through store openings and franchise partnerships.
The food business, which spans grocery, ingredients, sugar and agriculture, generated roughly £9.8bn in annual revenue and operates across 52 countries. ABF said the standalone food group would benefit from greater recognition of its brand portfolio, supply chain position and long-term earnings potential.
The group expects both businesses to list on the London Stock Exchange’s Equity Shares (Commercial Companies) category and said both are likely to be large enough for FTSE 100 inclusion.
ABF said the demerger is expected to be completed before the end of 2027, subject to approvals and tax clearances. It will be carried out by way of a dividend demerger.
George Weston is expected to become chief executive of the food business, while Eoin Tonge will lead Primark. Michael McLintock will remain chair of ABF until the separation is complete.
The company said one-off separation and transaction costs are expected to be around £75m, while annual dis-synergies are forecast to come in at less than £45m.
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