Kellogg to split into three businesses in surprise move

Cereal accounted for $2.4 billion in gross sales final 12 months.
REUTERS

Kellogg, the maker of Frosted Flakes, Rice Krispies and Eggo, will cut up into three corporations centered on cereals, snacks and plant-based meals.

Kellogg’s, which additionally owns MorningStar Farms, the plant-based meals maker, mentioned Tuesday that the spinoff of the yet-to-be-named cereal and plant-based meals corporations needs to be accomplished by the top of subsequent 12 months.

Kellogg’s had web gross sales of $14.2 billion in 2021, with $11.4 billion generated by its snack division, which makes Cheez-Its, Pringles and Pop-Tarts, amongst different manufacturers. Cereal accounted for one more $2.4 billion in gross sales final 12 months, whereas plant-based gross sales totaled round $340 million.

“These companies all have important standalone potential, and an enhanced focus will allow them to higher direct their sources towards their distinct strategic priorities,” mentioned CEO Steve Cahillane.

Cahillane will turn into chairman and CEO of the worldwide snacking firm. The administration group of the cereal firm shall be named later. The board of administrators has permitted the spin-offs.

The cereal and plant-based meat corporations will stay headquartered in Battle Creek, Michigan, the place Kellogg was based in 1906.

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Shareholders will obtain shares within the two spin-offs on a pro-rata foundation relative to their Kellogg holdings.

US cereal gross sales have been waning for years as shoppers moved to extra moveable merchandise, like vitality bars. They noticed a quick spike throughout pandemic lockdowns, when extra individuals sat down for breakfast at residence. However gross sales fell once more final 12 months.

The cereal and plant-based meat corporations will stay headquartered in Battle Creek, Mich., the place Kellogg was based in 1906. The snack firm — which accounts for 80% of Kellogg’s present gross sales — could have twin campuses in Battle Creek and Chicago, with its headquarters in Chicago. Kellogg’s three worldwide headquarters in Europe, Latin America, and AMEA (Asia, Center East and Africa) will stay of their present places.

Shares of the corporate jumped 3.7% in noon buying and selling.