AB Foods Explores Splitting Primark and Food Business
AB Foods, the owner of fashion retailer Primark, is exploring a potential split into two separate businesses. The company's board is conducting a review, assisted by Rothschild & Co., to maximize long-term value. This comes after a 13% slump in profits last year, with the food business seeing a 6% drop in profits while Primark's profits grew by 2%.
The review, also supported by JPMorgan, is considering various options for separating the Primark retail division from the food business segment. These include a full demerger into two independent companies or alternative structural separations to allow for focused management of each segment. The group believes the value of its food business has been overlooked by financial markets.
The potential split follows the resignation of former Primark boss Paul Marchant, which could ultimately lead to the spin-off of the retailer. AB Foods' chairman has suggested that separating Primark and the food businesses could be beneficial in the future. Primark's size and success, with profits growing despite a 6% slide in the food business, make it a strong candidate for operating as a standalone business.
AB Foods' review, in consultation with its largest shareholder, aims to unlock the full potential of both its Primark retail division and food business. The exploration of a potential split follows a challenging year for the group, with profits slumping due to weak consumer confidence and low sugar prices. The outcome of the review will significantly shape the future of the company and its two major business segments.
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