Associated British Foods (ABF) is set to spin out its clothing and retail division, Primark, from the rest of the company following an in-depth review, it announced today.

ABF said it believes the demerger will have benefits to both companies by allowing each to appoint boards focused on the particular needs of their industries, as well as enhanced accountability to shareholders, who may wish to be invested in one side of the business and not the other.

ABF added that its shareholders would hold shares in both listed entities at the completion of the process, and that Whittington Investments, the holding company that owns 59 per cent of ABF, is supportive of the move and intends to retain controlling interests in both new firms.

The review began last November, and was described as a “positive surprise” by analysts at Barclays. Both parts of the company bring in nearly £10 billion in revenue, and are expected to be listed on the UK’s FTSE 100 market. ABF’s share price fell 3 per cent after markets opened following the news.

The demerger is set to be completed by the end of 2027, and cost around £75 million.

Whittington Investments is owned by the British branch of the Weston family, a food and retail dynasty spanning two continents. They are the UK’s richest family, and also own department stores Heal’s and Fortnum & Mason.

ABF financed the opening of the first Primark, then called Penny’s, in Dublin in 1969.

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