Abbott Labs to Carve Out Nutrition Business Into Independent Company — Update

By Connor Hart

Abbott Laboratories plans to separate its nutrition business into an independent company with about $8.5 billion in annual sales.

Shares were down 3.9% to $98.44 in premarket trading.

Abbott has been involved in years of litigation over its management of a baby-formula facility where deadly bacteria was suspected of causing infant deaths, and has agreed to pay several multimillion-dollar settlements.

Daniel Salvadori, who currently serves as executive vice president and group president of Abbott's established pharmaceuticals and nutritional products division, is slated to lead the new company, which is set to house electrolyte-beverage brand Pedialyte, as well as infant-formula brand Similac.

Abbott said its nutrition business "will be better positioned as an independent company to more effectively direct its strategic resources across its priorities," and that its "core higher-growth, innovation-driven portfolio of medical devices, diagnostics and established medicines has compelling growth opportunities."

Abbott expects to complete the transaction by the end of 2027. Upon completion, Abbott shareholders would own shares in both Abbott and the independent nutrition company.

Abbott doesn't expect the separation to impact 2026 guidance or the guidance for 2027 that the company plans to provide in January. Abbott expects to incur one-time charges, which will be quantified at a later date.

After the transaction, Abbott would have sales of approximately $42 billion, the company said.

The Justice Department spent years investigating Abbott Labs over how it managed a baby-formula facility where potentially deadly bacteria was discovered and suspected of causing infant deaths, worsening a national shortage, The Wall Street Journal reported in June.

Some prosecutors believed they had evidence to criminally charge the company under a law they have used to pursue other businesses for allegedly selling contaminated foods, the Journal said. But top decision makers instead closed the probe, the Journal reported.

In September, the company agreed to pay $385 million to settle allegations related to its management of that facility, the Justice Department said.

In August, Abbott Labs agreed to pay $670 million to resolve a lawsuit over its specialty formulas for premature infants as well as about 2,000 related claims. The settlement related to the Gill case, in which a Missouri jury ordered Abbott to pay $495 million in damages after determining the company failed to warn that its formula for preterm infants increased the risk for a bowel disease. Abbott's appeal to the 2024 verdict was denied.

Abbott previously said there are roughly 1,700 lawsuits pending in federal and state courts involving claims on behalf of about 12,700 individual infants.

Write to Connor Hart at connor.hart@wsj.com

(END) Dow Jones Newswires

October 21, 2026 08:40 ET (12:40 GMT)