TL;DR
Get baking supplies delivered free with Prime
- Fast, free delivery on millions of items
- Prime Video, Amazon Music and more included
- Member-only deals all year
Abbott plans to separate its nutrition business, which generates about $8.5 billion in annual sales, into an independent publicly traded company. The company expects the spin-off to close by the end of 2027, subject to regulatory approval and other conditions; shareholders are expected to receive shares in both companies.
Abbott plans to spin off its nutrition business into an independent, publicly traded company, separating brands including Similac, Ensure and Pedialyte from its medical devices, diagnostics and established medicines businesses. Abbott expects the separation to be completed by the end of 2027, subject to regulatory approval and other closing conditions.
The nutrition business generates approximately $8.5 billion in annual sales. In Abbott’s third quarter, it reported revenue of $2.26 billion, up about 5% year over year. Abbott said its shareholders will own shares in both the remaining Abbott and the new nutrition company once the separation is complete. The company has not yet provided details in the source report about the new company’s name or other terms of the transaction.
After the spin-off, Abbott’s remaining businesses will be medical devices, diagnostics and established pharmaceuticals. Abbott expects that company to have approximately $42 billion in sales. CEO Robert Ford said the nutrition business would be better placed to direct resources toward its own priorities, while the remaining company could focus on its portfolio of medical and pharmaceutical products.
The announcement accompanied Abbott’s third-quarter results. The company reported $13.01 billion in total sales, up 14.5% year over year, and lowered its 2026 sales-growth guidance to 6%, from a previous range of 6.5% to 7.5%. Abbott said the planned separation will not affect its 2026 or 2027 guidance, which it plans to provide in January.
Two Companies, Different Growth Priorities
The separation would reshape Abbott by placing its consumer nutrition products in a standalone public company and leaving medical devices, diagnostics and established medicines together under Abbott. Investors would hold shares in both businesses, but the companies would have separate operations and priorities after the transaction closes. Their future performance will depend on factors including market demand, costs and how each business allocates resources.
Analysts cited in the report pointed to the nutrition business’s recent effect on Abbott’s growth and margins. J.P. Morgan analyst Robbie Marcus wrote that the separation should improve overall top-line growth and margins. BTIG analyst Marie Thibault said nutrition’s margins were below Abbott’s corporate average and that infant-formula litigation liabilities remained an overhang. Those are analysts’ assessments, not confirmed outcomes of the proposed deal.
The transaction also draws attention because the nutrition business has faced legal and regulatory scrutiny linked to infant formula. The spin-off plan changes Abbott’s corporate structure, but the report does not say that it would resolve or end outstanding lawsuits.
Products Worth Considering
Cuisinart Portable Tabletop Propane Patio Heater, 11,000 BTU, Red
KitchenAid 28 oz Cold Brew Coffee Maker, KCM4212
Cuisinart 6-Quart Basket Air Fryer with Viewing Window, Stainless Steel and Black (AIR-200NAS)
As an affiliate, we earn on qualifying purchases.
Formula Recall and Legal Exposure
In 2022, Abbott recalled several powdered infant formula brands after concerns about potential contamination. The recall and temporary closure of a large Michigan manufacturing plant contributed to a shortage of powdered formula, according to the source report. Abbott has said no unopened, distributed Abbott infant formula tested positive for Cronobacter sakazakii.
In September, Abbott announced a $385 million settlement with the U.S. Department of Justice to resolve claims and lawsuits brought by certain relators and state attorneys general. Abbott said the government had closed its criminal investigation and that the settlement was not a finding of fault or liability. Separately, in August, the company agreed to pay about $670 million to resolve claims involving roughly 2,000 individuals over certain specialty formulas for premature infants and alleged links to necrotizing enterocolitis. Abbott said that agreement was not an admission of liability.
The planned spin-off follows a broader trend of large health-care companies separating businesses. The report cites Medtronic’s separation of its diabetes business and Johnson & Johnson’s plan to spin out its orthopedics business. These examples provide industry context; they do not establish what the financial effects of Abbott’s proposed separation will be.
“Our Nutrition business has a unique opportunity to capitalize on the growing demand for healthy nutrition, and it will be better positioned as an independent company to more effectively direct its strategic resources across its priorities.”
— Abbott CEO Robert Ford
Terms and Lawsuits Remain Open
The report does not specify the new company’s name, leadership, share distribution mechanics, or the full financial and tax terms of the transaction. Abbott has set a target of the end of 2027, but closing remains conditional on regulatory approval and other requirements, so the timing is not final.
Some lawsuits remain pending over Abbott’s nutrition business. The source does not detail how those claims will be allocated between the companies or what their eventual outcomes may be. Ford said resolving all litigation is not a prerequisite to completing the separation. Abbott has denied that its settlements amount to admissions of liability.
The expected financial profile of each company is also not a complete forecast of future results. Abbott has not provided detailed projections for the standalone nutrition company in the material available, and the effects on growth and margins cited by analysts remain expectations rather than established results.
Approvals Ahead of 2027 Separation
Abbott expects to complete the separation by the end of 2027, subject to regulatory approval and other closing conditions. The company plans to provide its 2026 and 2027 guidance in January and has said the spin-off will not affect that guidance. Investors will be watching for further information on the transaction’s structure, timing, and the proposed company’s financial and operating plans.
Pending legal cases and the process for allocating liabilities remain relevant developments as the separation advances. The source report does not give a schedule for resolving those matters or say whether they will change the anticipated closing date.
Key Questions
What does Abbott plan to spin off?
Abbott plans to separate its nutrition business, which includes Similac, Ensure and Pedialyte, into an independent, publicly traded company.
When is the spin-off expected to happen?
Abbott expects the separation to be completed by the end of 2027. The timetable depends on regulatory approval and other closing conditions.
What will Abbott shareholders receive?
Abbott said its stockholders will own shares in both Abbott and the new nutrition company when the separation is complete. Further details of the share distribution were not provided in the source report.
Will the spin-off resolve Abbott’s infant-formula lawsuits?
Not necessarily. Lawsuits remain pending, and Abbott CEO Robert Ford said fully resolving litigation is not a prerequisite for completing the separation. The report does not explain how outstanding claims will be divided between the companies.
What businesses will remain with Abbott?
After the planned separation, Abbott’s remaining businesses will be medical devices, diagnostics and established pharmaceuticals. Abbott expects the remaining company to have approximately $42 billion in sales.
Source: rss
