BATTLE CREEK, Mich (AP) — Kellogg Co, the maker of Frosted Flakes, Rice Krispies and Eggo, will split into three companies focused on cereals, snacks and plant-based foods. Kellogg’s, which also owns plant-based food maker MorningStar Farms, said Tuesday that the spinoff of the yet-to-be named cereal and plant-based foods companies should be completed by the end of next year. The cereal and plant-based food companies will remain headquartered in Battle Creek, Michigan, where Kellogg was founded in 1906. The snack company — which accounts for 80 per cent of Kellogg’s sales — will have its corporate headquarters in Chicago. Shares of Kellogg rose almost 4% to $70.15 in morning trading Tuesday.
Kellogg’s had net sales of $14.2 billion in 2021, with $11.4 billion generated by its snack division, which makes Cheez-Its, Pringles and Pop-Tarts, among other brands. Cereal accounted for another $2.4 billion in sales last year while plant-based sales totalled around $340 million.
In a conference call with investors, CEO Steve Cahillane said separating the businesses will make them more nimble and better able to focus on their own products. All three businesses have significant stand-alone potential, he said.
“Cereal will be solely dedicated to winning in cereal and will not have to compete for resources against the high-growth snacking business,” said Cahillane, a former Coca-Cola and AB InBev executive who joined Kellogg Co in 2017.
Cahillane will become chairman and CEO of the global snacking company. The management team of the cereal company will be named later. The board of directors has approved the spin-offs.
Shareholders will receive shares in the two spin-offs on a pro-rata basis relative to their Kellogg holdings.
Cahillane said Kellogg has been carefully evaluating its portfolio since 2018, when it announced a plan to shift its resources toward its highest-growth categories, like snacks. In 2019, Kellogg sold its cookie, pie crust, ice-cream cone and fruit business to the Ferraro Group.