Kraft Approves Spin-off of North American Grocery Biz
The Board of Directors of Kraft Foods Inc. approved the spin-off of its North American grocery business today and declared a pro rata distribution of shares of Kraft Foods Group, Inc. to holders of Kraft Foods Inc. common stock to be completed on Oct 1.
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 each shareholder as of Sept. 19. The Board also declared a regular quarterly dividend of $0.29 per share of Kraft Foods Inc. common stock to those of record as of Sept. 19, payable on Oct. 15.
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 distributed to shareholders who would have otherwise received fractional shares.
Kraft Foods Inc. has received a private letter ruling from the IRS and an opinion of tax counsel confirming that the distribution of shares of Kraft Foods Group common stock will generally not be taxable to Kraft Foods Inc. or U.S. holders of Kraft Foods Inc. common stock. Although cash received in lieu of fractional shares will be taxable.
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 Inc. and Kraft Foods Group expect that all conditions to the spin-off will be satisfied on or before the distribution date.