Abbott Laboratories to Spin Off 8.5 Billion Dollar Nutrition Division into Standalone Public Company
Chicago, Wednesday, 21 October 2026.
Abbott Laboratories announced on October 21, 2026, plans to spin off its $8.5 billion nutrition unit—home to Similac—into an independent public company by late 2027 via a tax-free distribution.
Abbott Laboratories Announces Strategic Separation
Abbott Laboratories (NYSE: ABT) announced on Wednesday, 21 October 2026, plans to separate its Nutrition business into an independent, publicly traded company [1][3][7]. The strategic restructuring aims to allow both the core medical technology business and the nutrition division to pursue tailored business strategies and capital allocation priorities [3]. The Nutrition unit, which includes well-known brands such as Similac, Ensure, and Pedialyte, generates approximately $8.5 billion in annual sales [3][5][7]. This segment employs about 16,000 people across 14 manufacturing sites globally [3][7]. Based on the reported figures, the nutrition unit represents 16.832 percent of the combined annual sales volume prior to separation [4][7].
Strategic Rationale and Market Response
The decision follows a series of missteps that have weighed on the company’s broader performance, prompting a move to sharpen focus on distinct growth profiles [1][4]. Company shares experienced a brief initial decline following the announcement, with stock slipping as investors digested the news ahead of the company’s third-quarter 2026 earnings [2][7]. Despite the market reaction, leadership asserts that the separation will benefit both companies by setting each one up for maximum success in its respective market [3][7]. The remaining Abbott entity is projected to retain medical devices, diagnostics, and established pharmaceuticals businesses, with projected annual sales of approximately $42 billion [3][4].
Leadership Appointments and Operational Scope
Daniel Salvadori, currently executive vice president and group president of Established Pharmaceuticals and Nutritional Products at Abbott, is named to lead the new Nutrition company as chief executive officer [3][5][7]. Salvadori has been with Abbott since 2014 and will oversee the standalone entity’s strategic direction [5][7]. Robert B. Ford, chairman and chief executive officer of Abbott, stated that the Nutrition business has a unique opportunity to capitalize on growing demand for healthy nutrition as an independent company [5][7]. The separation is designed to enable more effective direction of strategic resources across priorities for both entities [5].
Transaction Timeline and Shareholder Implications
Abbott intends to execute the separation through a tax-free distribution of shares in the new Nutrition company to existing Abbott shareholders, with the transaction expected to be completed by the end of 2027 [3][5][7]. Upon completion, shareholders would hold equity in both companies, and the combined dividend paid by the two entities is expected to equal Abbott’s dividend at the time of separation [3][4]. The separation is subject to regulatory approvals, the effectiveness of a Form 10 registration statement, and final approval by Abbott’s board of directors [3][5]. Abbott confirmed the planned separation will not affect its financial guidance for 2026 or the 2027 guidance it plans to issue in January 2027 [3][7].