Kellogg shares jump in plans to split into three companies

Kellogg announced on Tuesday that it plans to split into three independent public companies, splitting its iconic brands into separate companies for snacks, cereals and plants.

The company’s shares rose 8% in pre-market news trading.

Kellogg’s North American cereals business and the plant-based division together accounted for about 20 percent of its revenue last year. The rest of the business includes brands of snacks, noodles, international cereals and North American frozen breakfast, which together account for about 80% of its sales in 2021.

“All of these companies have significant stand-alone potential, and the improved focus will allow them to better focus their resources on their individual strategic priorities,” CEO Steve Cahilon said in a statement.

The company said it would explore other strategic alternatives, including potential sales, for its factory business, beyond the planned spin-off.

Kellogg said it expects tax-free taxation to be completed by the end of 2023. The names of the new companies have not yet been decided, and the proposed management teams for the two divisions will be announced at a later date. Cahillane will remain CEO of the company, which focuses on global snacks.

The headquarters of the three businesses will remain unchanged. Both the North American Cereal Company and the Spinof Plant Plant will be located in Battle Creek, Michigan. The global snack company will maintain its corporate headquarters in Chicago, with another campus in Battle Creek.

Cheez-It, Pop-Tarts and RXBAR are among the brands to be housed in the global snack company, which had sales of $ 11.4 billion last year. About 10% of these sales come from the growing noodle business in Africa, while another 10% come from Eggo waffles and the rest of the frozen breakfast business. North America will account for 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 spinoff will use the Morningstar Farms brand as its anchor. Spinoff offers investors another plant-based game Beyond the meatwhich has not made a three-month profit for nearly three years and has seen its shares fall 63% this year.

The proposed North American cereal company will include Froot Loops, Special K and Rice Krispies. Last year, the business recorded sales of $ 2.4 billion. In the short term, Spinoff will focus on recovering from supply chain disruptions and regaining lost market share. Kellogg expects to generate stable revenues over time as a stand-alone company, while improving profit margins.

Read the full press release here.

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