Kellogg plans to split into three companies

Kellogg says it is splitting into three independent companies by spinning off its North American cereal and plant-based foods businesses, becoming the latest big US group to break itself up.

The share price of the company, which began life in 1894 when WK Kellogg created Cornflakes and became known around the world for its breakfast cereals, jumped 7% in premarket trading on Tuesday.

In recent years, however, the company has focused on building its snacking portfolio, which includes its international cereals and noodles, and North America frozen breakfast business. The division brought in $11.4bn in net sales in 2021, accounting for 80% of its total sales.

Kellogg said that its other two divisions — US, Canadian and Caribbean cereal and plant-based businesses — collectively represented about 20% of its net sales in 2021.

The company said the names of the three companies would be determined later.

The Battle Creek, Michigan-based company said snacks would be the biggest focus among the three. It will be helmed by Kellogg CEO Steve Cahillane and include brands such as Pringles, Cheez-It and Pop-Tarts.

The company’s North American cereal business accounted for about $2.4bn of its net sales in 2021 and includes popular US breakfast cereal brands such as Kellogg’s, Frosted Flakes and Froot Loops.

“These businesses all have significant stand-alone potential, and an enhanced focus will enable them to better direct their resources towards their distinct strategic priorities,” said Cahillane.

In the past two years, major US companies such as Johnson & Johnson and General Electric said they were splitting their business.

Reuters