Abbott Laboratories plans to separate its Nutrition business into an independent publicly traded company, creating a focused group with about US$8.5 billion in annual sales. The healthcare company expects to complete the transaction by the end of 2027, subject to regulatory, tax and board approvals.
The proposed company will own widely recognised brands including Similac, Ensure, PediaSure, Pedialyte and Glucerna. Abbott will retain its medical devices, diagnostics and established-pharmaceuticals operations, which together are expected to generate approximately US$42 billion in annual sales after the separation.
Abbott Nutrition separation targets end-2027
Abbott intends to distribute shares in the new Nutrition company to existing shareholders through a transaction designed to be tax-free for US federal income-tax purposes. Investors would own shares in both companies when the separation is complete, according to Abbott's official announcement.
The transaction will require the effectiveness of a Form 10 registration statement, regulatory clearances and final approval from Abbott's board. The Nutrition unit will continue operating inside Abbott during the separation process. Goldman Sachs is advising Abbott financially, while Wachtell, Lipton, Rosen & Katz is legal counsel.
Abbott told investors that the planned transaction does not change its 2026 guidance or the 2027 guidance it expects to provide in January. The company will incur one-time separation costs, although it has not yet quantified them.
Nutrition business has US$8.5 billion in sales
The new company is expected to employ about 16,000 people and operate 14 manufacturing sites. Abbott's separation presentation estimates an adjusted gross-margin profile of roughly 45% and an adjusted operating margin near 18% for the Nutrition business on a 2026 pro-forma basis.
Its portfolio covers infant, paediatric, adult and specialised medical nutrition. Similac leads the US infant-formula category, while Abbott describes Ensure as the world's leading adult nutrition drink, PediaSure as the leading paediatric nutrition drink and Glucerna as the leading diabetes-targeted nutrition drink.
Geographically, 47% of Nutrition sales come from the United States, 42% from emerging international markets and 11% from developed markets outside the US. Adult products account for 53% of sales and paediatric products make up the remaining 47%, giving the standalone company a diversified mix of consumers and markets.
Abbott focuses on devices and diagnostics
After the separation, Abbott expects its remaining portfolio to produce an adjusted gross margin of about 60% and an adjusted operating margin near 25%. Management projects the change could lift Abbott's sales-growth rate by 50 to 100 basis points, gross margin by more than 200 basis points and operating margin by roughly 100 basis points.
Reuters reported that Abbott also lowered its 2026 sales-growth forecast as medical-device weakness affected the outlook. The combination of a softer near-term forecast and a major portfolio change gives investors two issues to assess: current execution and the longer-term value of a more focused business structure. Details were also filed in Abbott's Form 8-K with the US Securities and Exchange Commission.
The plan arrives during an active period for corporate restructuring and capital-market transactions. BullBuzz recently covered Getty Images' US$533 million restructuring proposal, a possible SpaceX-Tesla combination and US$26.3 billion of anchor demand for the Jio IPO.
What shareholders should watch
The most important next steps are the Form 10 filing, the selection of the new company's name and board, and disclosure of its capital structure. Abbott expects both businesses to maintain investment-grade credit profiles. It also plans for their combined dividend to equal Abbott's dividend at the time of separation, although future dividends will remain subject to each board's approval.
Management has identified Daniel Salvadori, currently executive vice-president and group president for Established Pharmaceuticals and Nutritional Products, as chief executive of the new company. Investors will now look for evidence that an independent Nutrition group can accelerate product investment and growth while Abbott improves the margins and growth profile of its remaining healthcare portfolio.