Kraft Foods splits into two independent companies

US-based Kraft Foods and its snack food spin-off Mondelez International will start trading on the Nasdaq as separate companies from today.

Mondelez International will own brands such as Oreo, Cadbury and Nabisco and will trade on the Nasdaq under the ticker ‘MDLZ’, while Kraft Foods will own brands such as Velveeta, Miracle Whip and Oscar Mayer, along with the Kraft name, and will trade under the ticker ‘KRFT’.

Kraft expects its earnings per share to grow somewhere in the range of mid- to high-single digit percentage over the long term, while Mondelez expects revenue to increase by 5% to 7% and EPS to see double digit growth.

Kraft Foods will continue to operate from its current headquarters in Northfield, Illinois, but Mondelez will shift to new premises nearby in the next few weeks.

Mondelez, which owns strong international brands such as Oreo, Toblerone and Cadbury, expects to stay focused on these power brands and intends to focus on advertising, research and development as these brands represented 60% of Kraft’s revenue before the split.

In August 2011, Kraft Foods announced plans to form two independent public companies through a tax-free spin-off of its North American grocery business.

At the time of the announcement, Kraft Foods chairman and CEO Irene Rosenfeld said that the benefits that come from creating two independent companies would provide even greater opportunities for the company’s brands.

With the spin-off, Kraft planned to create a global snacks business with estimated revenue of approximately $32bn, and a North American grocery business with estimated revenue of approximately $16bn.

In the second quarter ended 30 June 2012, the company reported a 5.4% increase in net income to $1.03bn, compared to $976m in 2011, driven by higher pricing that helped to offset the effect of a stronger dollar and rising commodity costs.

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Image: In August 2011, Kraft Foods announced plans to form two independent public companies through a tax-free spin-off of its North American grocery business. Photo courtesy of Bearas.