Associated British Foods is to spin off its Primark business, dismantling one of Britain’s largest consumer groups in a move aimed at unlocking shareholder value.
The surprise decision came as Primark warned of weaker trading in April, with bosses pointing to pressure on consumer confidence linked to instability in the Middle East. Shares in ABF fell in early trading following the announcement.
The conglomerate, which spans grocery, sugar and agriculture alongside its vast retail arm, said it plans to complete the demerger by the end of 2027 after a strategic review of its structure.
Both the standalone Primark business and the remaining food-focused group are expected to secure places on the FTSE 100 after the split, creating two separately listed giants.
Control will remain with the Weston family, with Wittington Investments retaining majority stakes in both entities.
Primark, which operates 486 stores across 19 markets and employs more than 83,000 staff, generated annual revenues of roughly £9.5bn, cementing its position as a dominant force on the high street.
Meanwhile, ABF’s food division — which will retain the Associated British Foods name — employs around 55,000 people and owns a stable of major grocery brands including Twinings, Ryvita and Patak’s.
George Weston will continue as chief executive of the food business, while finance chief Eoin Tonge is set to lead Primark as a standalone company.
Bosses acknowledged the separation will come at a cost, with around £75m in one-off transaction The group also warned it would forgo up to £45m in annual restructuring expenses. synergies once the businesses are split.
However, executives argued the break-up would allow both companies to pursue clearer strategies and improve returns, as investors increasingly favour more focused, “pure-play” businesses over sprawling conglomerates.
Weston, chief executive of ABF, 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 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.”
Michael McLintock, chairman of ABF, 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.
“The opportunities ahead for both Primark and Food are considerable and the board firmly believes that each will thrive as an independent entity.”
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