Kellogg Reveals Plans to Split Into 3 Companies as Its Shares Jump Nearly 8%

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by Mayowa Adebajo · 2 min read
Kellogg Reveals Plans to Split Into 3 Companies as Its Shares Jump Nearly 8%
Photo: Wikimedia Commons

Kellogg is carrying out a major shakeup of its company for the first time in over a century of existence.

Popular food company Kellogg (NYSE: K) may have just announced its plans to split into three separate entities. The American multinational food manufacturer revealed this in a Tuesday announcement where it gave further details of the split.

According to the announcement, there will be a snacks unit – which produces Pringles and Cheez-Its. The North American cereal unit will carry on producing Rice Krispies, Froot Loops, and the likes. And, lastly, there will be a plant-based foods unit that will be anchored by its MorningStar Farms brand.

In a follow-up announcement on Twitter, Kellogg has shared the new names that the spin-offs will take on. They are: Global Snacking Co., North America Cereal Co., and Plant Co.

But by Q1 2023, the management team for the two spinoffs will be announced. All necessary processes to finalize the split are also expected to be completed by the end of next year.

Kellogg to Focus on Its Fast-selling Business

Meanwhile, according to the announcement, the decision to split was made necessary by the revenue report of the company. Per the report, Kellogg’s North American cereal arm and the plant-based division could only account for around 20% of the company’s entire revenue in 2021. This means that its snacks business was in fact, the most productive business for the year.

With this reality, Kellogg has now decided to shed its slower-growing businesses to maintain an overall growth of its business.

Speaking about the development, the CEO of Kellogg, Steve Cahillane, acknowledged the potential of each business. However, he also insisted that the company is determined to prioritize where its resources go.

As Shares Jump in Excitement…

Shortly after the announcement, shares of the company responded, rising nearly 8% in premarket trading.

At the time of writing however, K shares of Kellogg Co. K is still up 4.14% at $70.34. And so proves to outperform many in a not-so-exciting trading session for the stock market. That is considering that the S&P 500 Index SPX is up by 2.06% to 3,750.52 and Dow Jones Industrial Average DJIA is up by 1.50% to 30,336.89.

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