Kellogg Shares Jump After Company Announces 3-Way Split

Cincinnati - Circa February 2020: Kellogg's Snack Division.
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Kellogg Company announced on June 21 that its Board of Directors has approved a plan to separate its North American cereal and plant-based foods businesses into three spin-offs, to be “better positioned to unlock their full standalone potential.”

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The announcement sent the shares up 7.8% in pre-market trading on June 21.

The three companies, whose names will be determined later, would be “Global Snacking Co.” with $11.4 billion in net sales, according to a press release. This will include global snacking, international cereal and noodles, and North America frozen breakfast. Nearly 60% of Kellogg’s net sales come from global snacks, including Pringles, Cheez-It crackers, Pop-Tarts, Rice Krispies Treats, Nutri-Grain bars and RXBAR.

The “North America Cereal Co.,” with its $2.4 billion in net sales, will be a cereal company in the U.S., Canada and the Caribbean. Its portfolio includes Kellogg’s, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked, according to the release.

Finally, “Plant Co.,” with $340 million in net sales, will be a plant-based foods company, anchored by the MorningStar Farms brand.

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“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,” Steve Cahillane, Kellogg Company’s Chairman and CEO said in the release. “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 said it expects the North America Cereal Co. spin-off to precede that of Plant Co., with both currently targeted to be completed by the end of 2023.

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, according to the release.

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The Wall Street Journal reported that the spin-offs follow similar moves last year from General Electric and Johnson & Johnson. 

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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