15 Aug 2012 --- Kraft Foods Inc. has announced that its Board of Directors has approved the spin-off of its North American grocery business and declared a pro rata distribution of shares of Kraft Foods Group, Inc. (which will hold the North American grocery business) to holders of Kraft Foods Inc. common stock. 

The Board of Directors also declared a regular quarterly dividend of $0.29 per share of Kraft Foods Inc. common stock. This cash dividend is payable on Oct. 15, 2012, to Kraft Foods Inc. stockholders of record as of the close of business on Sept. 19, 2012.

Kraft Foods Inc. will complete the spin-off of its North American grocery business at 5 p.m. EDT on Oct. 1, 2012 (the "distribution date") through a pro rata dividend of all outstanding shares of Kraft Foods Group common stock it owns to its shareholders of record as of the close of business on Sept. 19, 2012 (the "record date"). On the distribution date, each Kraft Foods Inc. shareholder will receive one share of Kraft Foods Group common stock for every three shares of Kraft Foods Inc. common stock held by such shareholder on the record date. The distribution of these shares will be made in book-entry form, which means that no physical share certificates will be issued.

No fractional shares of Kraft Foods Group common stock will be issued. Instead, the distribution agent will aggregate fractional shares of Kraft Foods Group common stock and sell the whole shares in the open market. The aggregate net cash proceeds of the sales will be ratably distributed to those shareholders who would otherwise have received fractional shares of Kraft Foods Group common stock.

Kraft Foods Inc. has received a private letter ruling from the U.S. Internal Revenue Service and an opinion of tax counsel confirming that the distribution of shares of Kraft Foods Group common stock generally will not be taxable to Kraft Foods Inc. or U.S. holders of Kraft Foods Inc. common stock. Cash received in lieu of fractional shares will, however, be taxable. Shareholders should consult their tax advisors with respect to U.S. federal, state, local and non-U.S. tax consequences of the Kraft Foods Group spin-off.

The distribution does not require shareholder approval, nor is any shareholder action or payment necessary to receive shares through the distribution of Kraft Foods Group common stock. Kraft Foods Group has prepared an information statement that includes material regarding the spin-off and its business following the spin-off.

The distribution of Kraft Foods Group common stock is subject to the satisfaction or waiver of certain conditions, including but not limited to the effectiveness of the Registration Statement on Form 10 that Kraft Foods Group filed with the U.S. Securities and Exchange Commission.  Kraft Foods Inc. and Kraft Foods Group currently expect that all conditions to the spin-off will be satisfied on or before the distribution date.

Earlier this year, Kraft, which is present in 170 countries and has 12 brands that guarantee at least $1 billion in annual revenues, announced plans 1,600 job cuts as it slimmed down before its split. Back then, they noted that the snacks business, which will be renamed Mondelez International, would stay under current CEO Irene Rosenfeld, while Tony Vernon, current head of North American operations, would take the helm at the new company.