Abbott to spin off Similac, Ensure nutrition unit; shares fall 4%

Abbott Laboratories, the US healthcare company, said on Wednesday, October 21, 2026, that it plans to separate its nutrition business, home of brands such as Similac, Pedialyte and Ensure, into an independent company listed on the stock market by the end of 2027. The announcement came alongside its July-September quarterly results. Abbott shares fell more than 4% in early trading after the news, a drop that reports said wiped roughly $7 billion off the company's market value.

A spin-off is when a company turns one of its divisions into a separate company and hands the new company's shares to its own shareholders. Companies usually do this when they think two businesses will be valued more highly apart than together, because investors can then buy the part they want. For Abbott, the nutrition business, which makes infant formula and adult nutrition drinks, grows more slowly than its medical devices and diagnostics businesses. Separating it lets Abbott present itself mainly as a medical technology company.

The market's first reaction was negative. Shares fell more than 4% before the regular session opened on October 21 and were reported trading about 4% lower, at around $98.60, soon after the results. Market reports pointed to open questions, including the one-time costs of the separation, which Abbott said it will spell out later, and which of the two companies will carry the legal cases over infant formula that Abbott faces in the United States. The company's release did not answer that second question, according to one market report.

On the earnings call, Abbott's chief executive, Robert Ford, ruled out selling the nutrition business instead, saying the company had "no interest" in a sale. The company also said the combined dividend paid by the two companies after the split is expected to equal Abbott's dividend at the time of the separation, which matters to income-focused shareholders.

Short-term: Abbott shareholders saw the value of their holdings fall on the day of the announcement. Over the coming months, attention will turn to the filing that sets out the new company's finances, known in the US as a Form 10, and to how much the separation will cost.

Long-term: If the split goes ahead by the end of 2027, investors will own two companies with different growth rates and risks: Abbott, focused on medical devices, diagnostics and medicines, and a standalone nutrition company built around infant and adult nutrition brands.

Who is affected: Abbott's shareholders; the roughly 16,000 employees of the nutrition business; parents and consumers who buy its formula and nutrition drinks; and plaintiffs in US infant formula cases, depending on which company takes on that liability.

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