Kellogg’s to break into cereal, snacks and plant food branches

Company's heavy sales come from its snack section. Around $11.4 billion generated by the section.

Kelloggs to split into cereal, snacks and plant food branch
Each branch has a standalone potential, says CEO

Kellogg Co, the maker of Frosted Flakes, Rice Krispies and Eggo will be splitting into three companies focused on cereals, snacks and plant-based foods respectively.

Kellogg’s which also owns MorningStar Farms, the plant-based food maker, said on Tuesday that the spinoff of the yet to be named cereal and plant-based foods companies should be completed by the end of next year.

Kelloggs had net sales of $14.2 billion in the year 2021, with $11.4 billion generated by its its snack division. Cereal accounted for another $2.4 billion in sales last year while plant-based sales were around $340 million.

The CEO of Kelloggs, Steve Cahillane said that these businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities.

Shareholders will receive shares in the two spin-offs on a pro-rata basis relative to their Kellogg holdings.

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The company’s corporate headquarters will move from Battle Creek, Michigan, to Chicago, but it will maintain its dual headquarters in both cities for its snack branch, which makes up about 80% of current sales.

Kellogg’s three international headquarters in Europe, Latin America, and AMEA will remain in their current locations.

As per an observation, companies have begun to split up at an accelerated pace, including General Electric, IBM and Johnson & Johnson, but such splits are more rare for food producers. The last major split in the sector was in in 2012, when Kraft split to create Mondelez.

The shares of Kellogg Co. jumped 8% to $73.29 before the opening bell on Tuesday.

(With Agency inputs)

 

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