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Abbott plans to separate its nutrition business, which has about $8.5 billion in annual sales, into an independent publicly traded company. The transaction is targeted for the end of 2027, subject to regulatory approval and other conditions; existing Abbott shareholders are expected to receive shares in both companies.
Abbott said Wednesday it plans to spin out its nutrition business as an independent, publicly traded company, separating brands including Similac, Ensure and Pedialyte from its medical devices, diagnostics and established medicines businesses. The company is targeting completion at the end of 2027, subject to regulatory approval and other closing conditions.
The nutrition division generates approximately $8.5 billion in annual sales. Abbott said the business brought in $2.26 billion in third-quarter revenue, up about 5% from a year earlier. The company reported $13.01 billion in total third-quarter sales, an increase of 14.5%, and reduced its 2026 sales growth forecast to 6%, from an earlier range of 6.5% to 7.5%.
After the separation, Abbott would retain its diagnostics, established pharmaceuticals and medical devices businesses. The company said the remaining business would have approximately $42 billion in sales. Abbott shareholders are expected to own shares in both Abbott and the new nutrition company once the transaction is completed.
Abbott said the planned separation will not affect its 2026 or 2027 guidance; it plans to provide that guidance in January. The company has not supplied a name for the new company or detailed its leadership, share distribution mechanics or expected standalone costs in the material provided.
How the Split Would Reshape Abbott
The separation would give Abbott’s nutrition operations a standalone public listing while leaving the parent focused on medical devices, diagnostics and established medicines. Abbott CEO Robert Ford said the division could direct its strategy and resources independently, while the remaining company could concentrate on what he described as a higher-growth, innovation-driven portfolio. Those are the company’s stated reasons for the plan, not a guarantee of future performance.
The proposed spinout also matters because nutrition has faced business and legal pressures. J.P. Morgan analyst Robbie Marcus wrote that separating the division should improve Abbott’s overall sales growth and margins. BTIG analyst Marie Thibault said nutrition had at times weighed on companywide sales growth and had margins below Abbott’s corporate average, while infant-formula litigation remained an overhang. The analysts’ assessments are opinions, and the eventual financial effect will depend on how the independent company performs and how the separation is structured.
For investors, the transaction would create two holdings from one: Abbott shares and shares in a newly independent nutrition company. For customers and the broader market, the announcement signals a change in corporate ownership structure, but Abbott has not said that the plan itself will change the products or brands currently sold.
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Formula Recall and Litigation Context
Abbott’s nutrition business has been under scrutiny following a 2022 recall of powdered infant formula over potential contamination. The recall and the temporary closure of a large Michigan manufacturing plant contributed to a U.S. shortage of powdered baby formula, according to the source report. The episode led to lawsuits and a federal investigation into the manufacturing and handling of the recall.
In September, Abbott announced a $385 million settlement with the Department of Justice to resolve claims, including claims brought by certain relators and state attorneys general. Abbott said the government had closed its criminal investigation. The company maintained that the settlement was not a finding of fault or liability and said no unopened, distributed Abbott infant formulas had tested positive for Cronobacter sakazakii.
In August, Abbott also agreed to pay approximately $670 million to resolve a lawsuit and claims involving about 2,000 individuals concerning certain specialty formulas for premature infants and alleged links to necrotizing enterocolitis. Abbott said that agreement was not an admission of liability. The source report says lawsuits involving the nutrition business remain pending. Abbott CEO Robert Ford said on the earnings call that fully resolving litigation was not a prerequisite for completing the spinout.
“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.”
— Robert Ford, Abbott CEO
Deal Terms and Legal Exposure
The separation remains a plan, not a completed transaction. Abbott has said it is subject to regulatory approval and other closing conditions, but the source material does not specify the full approval process, the precise distribution terms for shareholders or the new company’s eventual name and management. Those details may be provided as the process advances.
The company has also not said how pending litigation could affect the spinout, the standalone nutrition business or its financial position after separation. Ford’s statement means the cases do not have to be fully resolved before closing; it does not establish that the litigation will end or clarify its eventual costs. Abbott’s statements disputing liability and describing the settlements are company positions, while the underlying claims and lawsuits remain distinct legal matters.
Steps Toward a Late-2027 Separation
Abbott’s stated target is to complete the spinout at the end of 2027, subject to required approvals and closing conditions. The company has not outlined a detailed milestone calendar in the source report. Investors will need further filings and company announcements for information about the distribution of shares, financial statements for the standalone business, leadership and any separation-related expenses.
Abbott plans to provide its 2026 and 2027 guidance in January, and says the spinout plan does not change that guidance. In the meantime, the proposed separation remains in development, with the company’s next disclosures expected to clarify how it intends to divide the businesses and address outstanding transaction requirements.
Key Questions
Which Abbott businesses are part of the planned spinout?
The planned company would contain Abbott’s nutrition business, including brands such as Similac, Ensure and Pedialyte.
When does Abbott expect the separation to close?
Abbott is targeting the end of 2027. Completion depends on regulatory approval and other closing conditions.
What will Abbott shareholders receive?
Abbott says its shareholders will own shares in both Abbott and the new nutrition company after the spinout. The detailed share distribution terms have not been provided in the source material.
Will the spinout end the infant-formula lawsuits?
No such outcome has been announced. Abbott says fully resolving litigation is not a prerequisite for the separation, and lawsuits remain pending, according to the source report.
Will the announcement change Abbott’s near-term guidance?
Abbott said the planned separation will not affect its 2026 or 2027 guidance, which it plans to provide in January.
Source: rss
