Associated British Foods is to demerge Penneys and Primark from its food business, breaking up its conglomerate structure after 65 years and paving the way for the fashion chain to list on the FTSE 100.
The group, which has a market capitalisation of about £13 billion (€14.9 billion), confirmed its plan to separate by the end of 2027 on Tuesday, following a five-month evaluation with shareholders.
The split is expected to be one of the largest ever FTSE 100 demergers and will create a stand-alone business for Primark, which has grown from a store in Dublin in 1969 to become one of the UK and Ireland’s largest clothing retailers.
ABF will focus on its food business, which includes sugar, agriculture and well-known grocery brands such as Twinings tea, Ovaltine drinks and Patak’s sauces.
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The confirmation came as ABF reported a 2 per cent fall in revenue for the 24 weeks to February to £9.7 billion, while pretax profit fell 9 per cent to £632 million driven by weak trading in its food business. Adjusted operating profit margins fell to 10.1 per cent, compared with 12.1 per cent a year ago.
Shares in ABF fell 4.6 per cent in early trading in London.
“[The split] is about long-term performance, long-term growth in both companies which I think will be made more likely by getting the long-term governance in place,” said George Weston, chief executive.
“The scale and complexity around Primark will be better served with its own board,” he added, noting the existing structure had been very successful, “but there comes a time when you need to move on”.
Primark has become ABF’s largest business, with its annual revenues of more than £9 billion accounting for about half of the group’s turnover. Analysts expect a separate listing for Primark that will give it a valuation close to peers such as Next.
[ Primark chief Eoin Tonge: ‘I want to bring Penneys back to what Penneys was’Opens in new window ]
ABF expects the demerger will add less than £45 million in costs, while one-off separation and transaction costs would be around £75 million, it forecasts.
Wittington Investments, the holding company for the Weston family that has food and retail businesses in North America and Europe, will retain majority control of both companies.
The group maintained its earnings guidance for the year. Weston told the FT that higher costs in the second half of the year, driven by the war in the Middle East, would be “manageable”.“The cost pressures haven’t hit yet. They will, particularly if this situation continues,” he said, adding that the company had already bolted on a fuel surcharge to bread distribution costs in Australia.
He also cautioned that Primark sales were dependent on consumer spending. “If consumer confidence deteriorates, and we’ve seen signs of it doing exactly that, then our sales levels will fall. Over the last two weeks, we’ve seen poor sales right across Europe.”
In preparation for the shake-up, ABF appointed Eoin Tonge as chief executive of Primark in March. He took over as interim CEO last year following the departure of Paul Marchant. – Copyright The Financial Times Limited 2026
[ Irishman Eoin Tonge appointed chief executive of PrimarkOpens in new window ]
