Kraft Foods Inc. (KFT) announced that the U.S. Internal Revenue Service, or IRS, has provided a favorable private letter ruling confirming the tax-free status of the planned spin-off of the company's North American grocery business and certain related internal reorganization transactions.
Subsequent to the transaction, the North American grocery business will be an independent, public company operating as Kraft Foods Group, Inc.
The company stated that on the basis of certain facts, assumptions, representations and undertakings set forth in the ruling, for U.S. federal income tax purposes, the distribution of Kraft Foods Group, Inc. common stock generally will not be taxable to Kraft Foods or to U.S. holders of Kraft Foods common stock, except in respect to cash received in lieu of fractional share interests, which generally will be taxable to the holders as capital gain.
Dave Brearton, executive vice president and chief financial officer, said, "This favorable tax ruling from the IRS is a significant milestone in the spin-off process. We remain firmly on-track to launch two industry-leading companies before the end of 2012."
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