Kellogg announced on Tuesday that they plan to split into three independent public companies, and divide their iconic brands into distinct snacking, breakfast cereal and plant-based companies.
The shares in the company rose 8% in pre-market trading on the news.
Kellogg’s North American grain business and plant-based division together accounted for about 20% of revenues last year. The remaining business includes snacks, noodles, international cereals and North American frozen breakfast brands, which together represented about 80% of sales in 2021[ads1].
“These companies all have significant independent potential, and an improved focus will enable them to better direct their resources towards their distinct strategic priorities,” CEO Steve Cahillane said in a statement.
The company said it would also explore other strategic options, including a potential sale, for its plant-based business, beyond the planned spinoff.
Kellogg said they expect the tax-free spin-offs to be completed by the end of 2023. The names of the new companies have not been decided yet, and proposed management teams for the two spin-offs will be announced at a later date. Cahillane will continue as CEO of the company with a focus on global snacking.
The headquarters of the three companies remain unchanged. Both the North American grain company and the plant-based food spinoff will be located in Battle Creek, Michigan. The global snacking company will retain its headquarters in Chicago, with another campus in Battle Creek.
Cheez-It, Pop-Tarts and RXBAR are among the brands that will be placed under the global snacking company, which had $ 11.4 billion in sales last year. About 10% of these sales come from the growing noodle business in Africa, while a further 10% comes from Eggo waffles and the rest of the frozen breakfast business. North America will represent almost half of the company’s revenue.
Kellogg’s plant-based division reported $ 340 million in sales and approximately $ 50 million in profit before interest, taxes, depreciation and amortization last year. The planned spin-off would use the Morningstar Farms brand as its anchor. Spinoffen offers investors another plant-based stock game in addition to Beyond Meat, which has not made a quarterly profit in almost three years and has seen shares fall 63% this year.
The proposed North American grain company will include Froot Loops, Special K and Rice Krispies. Last year, the business had a turnover of 2.4 billion dollars. In the short term, the spinoff will focus on recovering from supply chain disruptions and regaining lost market share. Kellogg expects that it will generate stable income over time as an independent company and at the same time improve profit margins.
Read the full press release here.
This is breaking news. Please check back for updates.