Kellogg announces 3-way split
Kellogg’s said it’ll spin off its cereal business and its plant-based, meat alternatives line, leaving its snack food division to stand alone. Snacks like Pop-Tarts and Rice Krispies Treats are the company’s most lucrative product, accounting for about 80% of the company’s net sales in 2021.
Kellogg Chairman and C-E-O Steve Cahillane said in a video conference call to stakeholders on Tuesday morning that the split would create more value for shareholders.
“I think you'll recognize this news as Kellogg Company taking yet another bold, decisive move to create shareholder value. We already have the company performing very well. And you've seen this in our results. Now from a position of strength and momentum, we're ready to take the next step,” said Cahillane.
For now, the three companies will be called Global
Snack Co., North America Cereal Co. and Plant Co. Cahillane said permanent names for the three companies will be determined at a later date.
The cereal business is set to remain in Battle Creek. So would Plant Co., the plant-based meat alternatives company – at least tentatively. Cahillane indicated that Kellogg may sell that business.
Global Snack Co. is the only one that will move its headquarters out of Battle Creek. Its new HQ will be in Chicago, but Cahillane said it will maintain a Battle Creek campus.
All of this came as a surprise to 63rd State House District Representative Matt Hall.
“They didn’t give me any kinds of heads-up and they didn’t share a lot,” said Hall. “So, what I know is that this is something we’ve been seeing for a while from them. And that’s why we need to continue grow and diversify our economy locally.”
In a statement Tuesday, Kellogg said the spin-off of the two companies should be completed by the end of 2023. The statement added that the plan depends on approval from the Kellogg Board of Directors, the Internal Revenue Service and the Securities and Exchange Commission.