Kellogg to split into 3 companies

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Kellogg Company announced Tuesday that it will separate its North American cereal and plant-based foods businesses into three independent public companies. 

The three companies, which are being separated via tax-free spin-offs – include “Global Snacking Co.,” “North America Cereal Co.” and “Plant Co.” The names of the companies will be determined at a later date.

Global Snacking Co. will be a “leading company in global snacking, international cereal and noodles and North America frozen breakfast,” with estimated 2021 net sales of $11.4 billion. 

Nearly 60% of its net sales come from global snacks, less than a quarter come from cereal in international markets, approximately 10% come from noodles in Africa and less than 10% from frozen breakfast and the Eggo brand. 

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Kellogg said the business would expand profit margins and is expected to be a higher-growth company than the current company, still under the leadership of CEO Steve Cahillane. 

“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value. This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation,” Cahillane said in a statement. “These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”

Kellogg’s Corn Flakes owned by Kellogg Company is seen for sale at a store in Queens, New York City, U.S., February 7, 2022. (REUTERS/Andrew Kelly/File Photo / Reuters)

North America Cereal Co. reported $2.4 billion in sales last year and is focused on ready-to-eat cereal in the U.S., Canada and the Caribbean.

It will be focused on the restoration of inventory, profit margins and share position following 2021 supply disruptions.

Ticker Security Last Change Change % K KELLOGG CO. 69.75 +2.17 +3.22%

Kellogg said it would generate stable net sales over time and is comprised of brands like Kellogg’s, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked.

Plant Co. recorded $340 million in sales in 2021, and Kellogg said it would explore strategic alternatives with the company, including a possible sale. 

Kellogg’s cereal is shown on display during a preview of a new Walmart Super Center prior to its opening in Compton, California, U.S., January 10, 2017. REUTERS/Mike Blake/File Photo (REUTERS/Mike Blake/File Photo / Reuters Photos)

The independent business is expected to accelerate net sales growth over time and is anchored by the MoringStar Farms brand. 

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North America Cereal Co. and Plant Co. will both remain headquartered in Battle Creek, Michigan. Global Snacking Co. will maintain dual campuses in Battle Creek and Chicago, Illinois, with its corporate headquarters located in Chicago.

Kellogg said it believes now is the right time to split the businesses in order for them to pursue particular strategic priorities. 

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Independently, it said the three companies would be better positioned to execute with “increased agility and operation flexibility,” “realize improved outlooks for profitable growth” and “shape distinctive corporate cultures.”