Abbott Labs to Spin Off Nutrition Unit Into New Company
The medical giant plans to separate its nutrition business, which includes brands like Similac and Ensure, by late 2027.
Updated on Oct. 21, 2026 in Public Companies
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Abbott Laboratories announced a plan to spin off its nutrition division, which houses brands such as Similac, Pedialyte, and Ensure, into an independent publicly traded company. The separation will be executed through a tax-free distribution to current shareholders.
Why it matters
The nutrition business has struggled with significant operational challenges, including major product recalls and costly litigation related to infant formula safety. By creating a separate entity, Abbott aims to isolate these issues from its core business operations.
Abbott reached a $670 million settlement for formula-related lawsuits and a separate $385 million settlement regarding manufacturing practices. The company's shares fell 4% in pre-market trading on October 21, 2026.
The players
Abbott Laboratories
This is a global healthcare company that develops medical devices, diagnostics, and nutrition products.
Daniel Salvadori
He is the incoming chief executive officer of the independent nutrition company that will be created from the Abbott spin-off.
The details
Daniel Salvadori has been appointed to lead the new nutrition company as its chief executive officer. The company stated that the spin-off process is not expected to impact its previously issued earnings guidance for 2026 or 2027.
Timeline
A nationwide infant formula shortage occurred in 2022.
Abbott agreed to a $670 million settlement in August 2026.
The company settled manufacturing allegations for $385 million in September 2026.
Abbott announced the nutrition unit spin-off plan on October 21, 2026.
The spin-off is expected to be completed by the end of 2027.
Market Landscape
This move reflects a growing trend of corporate diversification where conglomerates divest underperforming or high-liability units to stabilize share performance. By spinning off the nutrition business, Abbott aims to decouple its core medical diagnostics and device segments from the specific operational risks that have plagued its consumer formula brands.
The transition will be handled as a tax-free distribution, meaning existing shareholders will retain equity in both the parent company and the new nutrition entity. Customers who rely on products like Similac and Ensure should not see immediate changes to product availability as the transition moves toward the 2027 deadline.
The takeaway
Shareholders should monitor upcoming investor communications for specific details regarding the stock distribution ratios. The move highlights how companies attempt to restore market confidence by hiving off divisions associated with high-profile litigation and past operational failures.
What happens next
The separation of the nutrition unit is expected to reach completion by the end of 2027.
Further reading
For more background on major corporate restructurings, visit the Public Companies section.
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