ASSOCIATED BRITISH FOODS (ABF) is to spin off its Primark and Penneys retail business.

Primark, which trades as Penneys in Ireland, has its headquarters in Dublin and is led by Irishman Eoin Tonge.

Tonge will continue as chief executive of Primark after the move.

ABF, which runs large food, sugar and agriculture operations, said it expects to separate Primark by the end of 2027.

The move comes after a significant review into the company structure in a bid to improve returns for shareholders.

Both companies will be listed on the UK’s FTSE 100 following the split.

Primark runs 486 shops across 19 markets, including 38 in Ireland, and employs more than 83,000 people worldwide.

The high street retail business reported annual revenues of around £9.5bn (€10.9bn).

ABF’s food business meanwhile has around 55,000 workers and produces grocery brands including Twinings, Ryvita and Patak’s.

The food operation will keep the Associated British Foods name following the separation.

Bosses said the break-up will result in around £75m (€86m) of one-off separation and transaction costs.

Goerge Weston, chief executive of ABF, remarked that this is an “important step in the evolution” of the company.

He said that for Primark, the move “enables the creation of appropriate governance to maximise the future potential offered by Primark’s powerful brand, strong customer proposition and opportunities in existing and new markets.”

Meanwhile, Michael McLintock, chair of ABF, said the “demerger of Primark is the best way to maximise long-term returns for shareholders” and reflects “Primark’s scale today”.