• Archives

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 21,921 other followers

  • Instagram

    Today, the United States spends $218 billion a year growing, processing, transporting, and disposing of food that is never eaten. Fortunately, there are a number of ways to reduce food waste.Click here to read IFT Achievement Awardee Edward Hirschberg’s solution for how we can address food loss due to poor transportation and storage. Link available in bio or copy/paste this link: http://bit.ly/IFTFoodWaste Today, we are celebrating women in science for International Women's Day! The International Women's Day is a global day celebrating the social, economic, cultural and political achievements of women. These particular five women have been at the forefront of some of today’s most complex and controversial scientific issues including genetic engineering and lab-grown meat. In addition to highlighting their work, these interviews explore the influence of gender in food and science. Click link in bio #IWD2017 #internationalwomensday #womeninstem #foodscience http://hubs.ly/H06wKB60 Roughly one third of the food produced in the world for human consumption every year — approximately 1.3 billion tons — gets lost or wasted. Fruits and vegetables have the highest wastage rates of any food. What can we do with spilled, wilted, blemished produce? Click here to read IFT Achievement Awardee Edward Hirschberg’s solution for bringing life back to the "ugly" lettuce. Link available in bio or copy and paste the following to view solution: http://bit.ly/IFTFoodWaste #Repost @hanna_instruments ・・・
The Hanna Texas team had a great time at @iftfoodscience's Lunch & Learn at @nasajohnson on 2/23. Hanna USA proudly sponsored this event featuring a talk by @nasa scientist Dr. Shannon Walker, a tour of the food lab facility, and behind-the-scenes tour of Mission Control! Thank you again to IFT and NASA for an incredible event.

A Food Company Divided = Double the Success?

When a company divides its operations into separate independent entities, it can restructure by distributing its ownership interests in a ‘subsidiary’ operation as a tax-free dividend to its existing shareholders, enabling them to own or sell shares or it could directly sell all or part of the separate entities. Such a spin-off may achieve a variety of objectives:

  • Revises its corporate business model through which the separate companies could better grow by rebalancing their operations.
  • Sharpens strategic focus and improves performance by better aligning each of the units to focus on their respective market segments.
  • Gives spin-off management complete autonomy to better manage its unit with direct accountability to public shareholders, and increases transparency of its performance.
  • Provides more clarity for investors of what value these businesses could generate separately and unlock “hidden value.”

Kraft Foods’ creation of two publicly listed companies—a North American grocery unit and a global snacks business—is strategically logical given the distinct different growth trajectories and prospects of each entity. The global snack business is expected to take advantage of the substantial growth opportunities in the emerging markets where chocolate sales, particularly among other snack items, are growing at a very fast pace. The grocery unit’s growth is more muted given the maturity of the developed market, but may produce a profitable return on investment.

The spin-off of these business units will allow for their different investment priorities, enable each to separately focus resources and management talent on the specifics of their respective markets.

Will this action, by one of the largest food companies, cause other market participants to consider following suit?

  • Ralcorp—The spin-off of its Post Foods business, while strategic, was executed for defensive and possibly value driven reasons.
  • Heinz—Its products of ketchup, sauces, and baby food have a global presence while those of its frozen products are ‘regional.’
  • Campbell Soup Co.—Its baking and snack business versus it soup, sauces, and beverages could be possibly viewed as two distinct units.
  • Sara Lee—Its mature product categories in combination with the change in management philosophy brought about the divestitures and spin-offs.

The global volatility in equities that has disturbed the Standard & Poor’s 500 Index may also be a motivating factor to act now as well.

Many companies may seek the rewards of dissecting their businesses to maximize shareholder value and comb through their business for assets that they can repackage for a public offering.

Some spin-offs will make sense and make CEOs and investors happy and others may not. What do you think the future holds for spin-offs? Who’s next?

Marco V. Galante, Principal,
J.H. Chapman Group LLC

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: