Abbott Rules Out Sale of Nutrition Business With $8.5 Billion in Annual Sales
Key Facts
Abbott Chief Executive Robert Ford ruled out selling the nutrition business, which generates about $8.5 billion in annual sales, favoring a spinoff into an independent company. Benzinga reported his remarks as the company announced the spinoff plan and its quarterly results on October 21. Ford said a spinoff would create greater shareholder value while avoiding potential tax complications associated with a sale. According to Abbott's announcement, the separation will take place through a distribution of shares in the new nutrition company to the parent company's shareholders. After the transaction, shareholders will own shares in both Abbott and the independently listed nutrition company.
Ford said the company had "no interest" in selling the business, according to Benzinga's account of his position on a divestiture. Management explained on the earnings call that the nutrition business differs from the rest of Abbott in its customer base and growth rates. It also cited differences in investment needs and innovation cycles as reasons to manage the businesses independently. According to management, the spinoff will allow each company to focus its resources and allocate capital in line with its business model. This stated rationale links the group's restructuring to each business's operating and investment needs, alongside the goal of creating shareholder value.
On the operating structure, Ford said on the earnings call that the new nutrition company would have about 16,000 employees. He added that the business includes 14 manufacturing sites as part of the operating infrastructure that will transfer to the independent company upon separation. Abbott selected Daniel Salvadori to lead the new company, according to the call transcript published by Investing.com. Salvadori oversees the group's established pharmaceuticals and nutritional products businesses, according to the company's announcement of his appointment. He will lead a business with approximately $8.5 billion in annual sales as Abbott moves to separate its management and resources from the rest of its operations.
Third-quarter results showed nutrition sales rose 5.1% from a year earlier to about $2.26 billion, according to Investing.com. At the group level, Abbott expects comparable sales growth of about 6.0% for 2026, according to the report published alongside the results. The company's shares fell 4.5% in premarket trading on the day of the announcement, according to the website, as the results and spinoff plan were released. The quarterly increase in nutrition sales follows the stagnation in the business's results that Abbott described in its previous annual report filed with the U.S. Securities and Exchange Commission. The company attributed that stagnation to higher prices and lower sales volumes, particularly in the United States.
In product development, Abbott said its nutrition innovation pipeline includes upcoming adult products containing collagen, protein and creatine. In its presentation of innovation plans, the company said these products respond to consumer preferences in the nutrition market. It described their launch as part of a broader innovation strategy for the business it intends to turn into an independent company. Management had included differences in innovation cycles among its reasons for separating nutrition from the rest of the group. Under the framework presented on the earnings call, each company will be able to direct investments independently toward its business requirements.
Abbott aims to complete the spinoff by the end of 2027, according to the expected timetable cited by Investing.com for establishing the independently listed company. During the earnings call, management said the new nutrition company plans to borrow and transfer part of the debt proceeds to Abbott. The amount of borrowing and the sum to be transferred to the parent company will be determined later as part of the financial details of the planned transaction. Management also expects both companies to pay cash dividends after the spinoff, under the arrangements presented to shareholders during the call. It said the combined dividends would equal the cash dividend Abbott pays at the time of the separation.