NORTHFIELD, Ill. -- Kraft Foods Inc. has announced that its board of directors has approved the spinoff of its North American grocery business and declared a pro rata distribution of shares of Kraft Foods Group Inc. (which will hold the North American grocery business) to holders of Kraft Foods Inc. common stock.
The board also declared a regular quarterly dividend of 29 cents per share of Kraft Foods Inc. common stock. This cash dividend is payable on Oct. 15, 2012, to Kraft Foods Inc. stockholders of record as of the close of business on Sept. 19, 2012.
Kraft Foods Inc. will complete the spinoff of its North American grocery business on Oct. 1, 2012 (the distribution date) through a pro rata dividend of all outstanding shares of Kraft Foods Group common stock it owns to its shareholders of record as of the close of business on Sept. 19, 2012 (the record date).
On the distribution date, each Kraft Foods Inc. shareholder will receive one share of Kraft Foods Group common stock for every three shares of Kraft Foods Inc. common stock held by such shareholder on the record date. The distribution of these shares will be made in book-entry form, which means that no physical share certificates will be issued.
No fractional shares of Kraft Foods Group common stock will be issued. Instead, the distribution agent will aggregate fractional shares of Kraft Foods Group common stock and sell the whole shares in the open market. The aggregate net cash proceeds of the sales will be ratably distributed to those shareholders who would otherwise have received fractional shares of Kraft Foods Group common stock.
Kraft Foods Inc. has received a private letter ruling from the U.S. Internal Revenue Service (IRS) and an opinion of tax counsel confirming that the distribution of shares of Kraft Foods Group common stock generally will not be taxable to Kraft Foods Inc. or U.S. holders of Kraft Foods Inc. common stock. Cash received in lieu of fractional shares will, however, be taxable. Shareholders should consult their tax advisors with respect to U.S. federal, state, local and non-U.S. tax consequences of the Kraft Foods Group spinoff.
The distribution does not require shareholder approval, nor is any shareholder action or payment necessary to receive shares through the distribution of Kraft Foods Group common stock. Kraft Foods Group has prepared an information statement that includes material regarding the spinoff and its business following the spinoff.
The distribution of Kraft Foods Group common stock is subject to the satisfaction or waiver of certain conditions, including but not limited to the effectiveness of the registration statement on Form 10 that Kraft Foods Group filed with the U.S. Securities & Exchange Commission.
Kraft Foods Inc. and Kraft Foods Group currently expect that all conditions to the spinoff will be satisfied on or before the distribution date.
Northfield, Ill.-based Kraft Foods Inc. is a global snacks company marketing delicious biscuits, confectionery, beverages, cheese, grocery products and convenient meals in approximately 170 countries, Kraft Foods had 2011 revenue of $54.4 billion; 12 of the company's iconic brands--Cadbury, Jacobs, Kraft, LU, Maxwell House, Milka, Nabisco, Oreo, Oscar Mayer, Philadelphia, Tang and Trident--generate revenue of more than $1 billion annually.
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