Kellogg, the maker of Frosted Flakes, Rice Krispies, and Eggo, announced today that it will be separating into 3 firms focused on cereals, snacks, and plant-based foods. Kellogg’s, which also owns MorningStar Farms (a plant-based food company) has stated that the yet-to-be-named cereal and plant-based food firms should be spun out by the end of next year.
In 2021, the firm had $14.2 billion in net sales, with the snack division accounting for $11.4 billion. Cereal sales increased by $2.4 billion last year, while plant-based sales totalled around $340 million. “These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” said CEO Steve Cahillane. Shareholders will be allocated pro-rata shares in the two spin-offs based on their stake in the company.
Kellogg’s corporate headquarters will relocate from Battle Creek, Michigan, to Chicago, but the company’s snack division will maintain dual headquarters in both cities, accounting for nearly 80% of current sales. The three international headquarters in Europe, Latin America, and the Americas will remain where they are. Kellogg Co. stock soared 8% to $73.29 before the market opened today.
Companies have begun to split up at an accelerated pace such as General Electric, IBM, and Johnson & Johnson, but these splits are quite uncommon among food manufacturers. The latest major food industry split occurred in 2012, when Kraft split to create Mondelez.