Finance
Ab Foods to Split Primark From Its Food Businesses
Published by Global Banking & Finance Review®
Posted on April 21, 2026
3 min readLast updated: April 21, 2026
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Associated British Foods will demerge Primark from its food businesses, allowing shareholders to own shares in both, aiming to unlock value amid valuation disconnect and operational challenges.
AB Foods to split Primark from its food businesses
Overview of AB Foods' Demerger Plan
By James Davey and Sarah Young
LONDON, April 21 (Reuters) - Associated British Foods will split Primark from its foods business, saying the fashion chain will be stronger as a standalone company with its own board and dedicated investors.
AB Foods has said the financial markets will better value both the food businesses, which include grocery brands such as Ovaltine, Ryvita and Twinings, and Primark if the retail arm goes it alone.
Primark's Recent Performance and Market Challenges
Over the last three years, Primark, which trades from 486 stores in 19 countries and has annual revenues of about 9.5 billion pounds, has faced intensifying competition from Chinese online giants Shein and Temu, while in January it warned profit would fall, partly due to discounting at the chain.
First-Half Profit Falls
FIRST-HALF PROFIT FALLS
Illustrating the challenge ahead, AB Foods reported an 18% fall in first-half core profit and said its full-year profit would be below the previous year's outcome due to weak trading at Primark in continental Europe and weaker ingredient markets in the U.S.
Shares in the group opened down 4%.
Company Response and Analyst Opinions
But AB Foods said it would be better equipped to deal with the tough markets as two companies.
"This is an important step in the evolution of ABF," chief executive George Weston said, adding that the split would maximise the potential of both units.
RBC analysts said that the split should improve the investability of AB Foods in the medium to long term, but warned: "The consumer outlook and outlook for both sides of the business looks quite challenging to us at the moment."
Details of the Demerger
Creation of Two Entities
TWO ENTITIES
On completion of the demerger, AB Foods shareholders will hold shares in both listed entities, which are expected to be in the FTSE 100, AB Foods said in a statement.
Shares in the group have fallen 14% over the last year, giving it a market capitalisation of 13.3 billion pounds ($18.0 billion).
Valuation and Future Prospects
Most analysts' sum of the parts valuations of AB Foods show Primark trades at a significant discount to peers, and analysts say Primark has the scale and growth opportunities to thrive as a standalone company.
The group launched a review of its structure last year, conducted in consultation with its largest shareholder Wittington Investments - the holding company for the Weston family.
The group expects to split before the end of 2027, with one-off separation costs of about 75 million pounds.
(Reporting by James Davey; editing by Paul Sandle)
Key Takeaways
- •Primark generates over half of AB Foods’ profit yet trades at a valuation discount to peers, prompting the planned demerger to unlock value across both segments.
- •The structural review, conducted with Rothschild & Co and approved by majority shareholder Wittington Investments, culminates in a split where existing shareholders will receive stock in both listed entities.
- •AB Foods faces pressure from weak sugar and food operations and shares have fallen around 14% over the past year, while Primark's scale and growth prospects support its standalone listing.
Frequently Asked Questions about AB Foods to split Primark from its food businesses
1Why is AB Foods splitting Primark from its food businesses?
AB Foods is demerging Primark following a review to maximise long-term value and allow financial markets to better appreciate each business.
2What will AB Foods shareholders receive after the demerger?
Shareholders will hold shares in both the separated Primark entity and the food businesses.
3What businesses are included in AB Foods' food operations?
AB Foods owns grocery brands like Ovaltine, Ryvita, Twinings, as well as sugar, agriculture, and ingredients operations.
4How many stores does Primark operate?
Primark operates from 486 stores across 19 markets.
5Who is the largest shareholder involved in the AB Foods demerger?
Wittington Investments, the holding company for the Weston family, is the largest shareholder and supports the demerger.
