P&G brewing up a Folgers spinoff
Forget Starbucks (SBUX). Caffeine-seeking investors will soon have a new coffee stock at their disposal - Folgers. Parent Procter & Gamble (PG) said Thursday it will separate its Folgers unit in a spinoff or split-off transaction later this year. Folgers - which made $350 million in operating income last year on sales of $1.6 billion - employs 1,250 workers and will be headquartered along with P&G in Cincinnati. Folgers has been part of Procter & Gamble for 45 years, but the parent believes it’s time to turn the java unit loose. Purely by coincidence, the decision comes as a looming recession threatens to weigh down consumer spending and big chains like Starbucks cool their growth plans.
“P&G believes the transaction will be good for the coffee business as the business will get greater priority and attention as a standalone company,” the maker of Tide and Crest said in a press release. “This separation allows us to focus on our core businesses and The Folgers Coffee Company to further develop and leverage its brand portfolio in a coffee-specific business model.” Plus, Wall Street will get a chance to decide whether the best part of waking up is Folgers in its cup.
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