Abbott (NYSE: ABT) announced plans to separate its Nutrition business into an independent, publicly traded company, with the transaction expected to be completed by the end of 2027.

The Nutrition unit, which carries brands such as Ensure, Similac, PediaSure, Pedialyte and Glucerna, generates approximately $8.5 billion in annual sales. The business employs about 16,000 people across 14 manufacturing sites.

Abbott intends to execute the separation through a tax-free distribution of shares in the new Nutrition company to existing Abbott shareholders. Upon completion, shareholders would hold equity in both companies. Abbott said the combined dividend paid by the two entities is expected to equal Abbott's dividend at the time of separation.

Following the split, Abbott would retain its medical devices, diagnostics and established pharmaceuticals businesses, with projected annual sales of approximately $42 billion.

Daniel Salvadori, currently executive vice president and group president of Established Pharmaceuticals and Nutritional Products at Abbott, is named to lead the new Nutrition company as chief executive officer.

"As we continue to shape Abbott for the future, this separation will benefit both companies, setting each one up for maximum success in its respective market," said Robert B. Ford, chairman and chief executive officer of Abbott.

The separation is subject to regulatory approvals, the effectiveness of a Form 10 registration statement and final approval by Abbott's board of directors. Abbott said the planned separation will not affect its financial guidance for 2026 or the 2027 guidance it plans to issue in January. One-time charges related to the transaction are expected but have not yet been quantified.

Goldman Sachs & Co. LLC is serving as financial advisor to Abbott, and Wachtell, Lipton, Rosen & Katz is serving as legal counsel.