Kraft Foods Inc. (NYSE: KFT) announced this morning that it has received a “favorable private letter ruling” from the US Internal Revenue Service “confirming the tax-free status of the planned spin-off of the company’s North American grocery business and certain related internal reorganization transactions.” This clears the way for the spin-off of the company’s grocery business from its snack foods business in a split first proposed last August.
The proposed split would create a $35 billion snack food company with brands like Oreo, Cadbury, Tang, and Trident, and a $14 billion grocery business that would continue to supply grocers with Maxwell House coffee, Jell-O, and Philadelphia-brand cream cheese.
One investor who is not excited by the news is Warren Buffett, who recently reduced his holdings of Kraft shares from 87 million to 78 million. Buffett never liked the deal Kraft made for Cadbury and has been lightening his holdings of the food giant ever since.
Paul Ausick
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