Kellogg Co. announced that it will separate its North American cereal and plant-based foods businesses into three independent companies via tax-free spin-offs. The three companies, whose names will be determined later, would be the following:
- “Global Snacking Co.” — With about $11.4 billion in net sales, it will be a company in global snacking, international cereal and noodles and North America frozen breakfast, with iconic, world-class brands and strong underlying growth momentum and profitability.
- “North America Cereal Co.” — With about $2.4 billion in net sales, this will be a cereal company in the U.S., Canada and Caribbean, with a portfolio of iconic, world-class brands and compelling opportunities for investment and profit growth.
- “Plant Co.” — With about $340 million in net sales, it will be a profitable, pure-play plant-based foods company, anchored by the MorningStar Farms brand, with a significant opportunity to capitalize on strong long-term category prospects by investing further in North America penetration and future international expansion.
“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,” said Steve Cahillane, Kellogg’s chairman and CEO, on the day of the announcement. “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.”
In recent years, the company has transformed its portfolio into one that has expanded geographically and shifted toward growing businesses, particularly in snacking categories. To achieve this, it has directed resources and investments toward growth categories and markets around the world, made several acquisitions and partnerships in emerging markets and strengthened its snacks business through acquisitions, divestitures and the freeing up of resources by exiting from direct-store delivery.
After several years of transformation and improving results, Kellogg believes it is the right time to separate these businesses so that it may pursue particular strategic priorities.