Kellogg To Split Into Three Companies, Corporate Headquarters Moves To Chicago

Kellogg's three global headquarters in Europe, Latin America, and AMEA will remain in their current locations

The net sales of Kellogg was $14.2 billion in 2021, with $11.4 billion generated by its snack division.

Source : Getty

Kellogg, the maker of Frosted Flakes, Rice Krispies, and Eggo, on Tuesday said that it will split into three companies and will focus on cereals, snacks, and plant-based foods, as reported by AP.

Kellogg’s which also owns MorningStar Farms, the plant-based food maker, said 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 net sales of Kellogg was $14.2 billion in 2021, with $11.4 billion generated by its snack division. Cereal accounted for another $2.4 billion in sales 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 and he 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, the report said.

According to the report, shareholders will receive shares in the two spin-offs on a pro-rata basis relative to their Kellogg holdings.

Kellogg said it would explore other options for its plant-based business, including a possible sale.

The company's corporate headquarters will move from Battle Creek, Michigan, to Chicago, but it will maintain dual headquarters in both cities for its snack firm, which makes up about 80 per cent of current sales. Kellogg's three global headquarters in Europe, Latin America, and AMEA will remain in their current locations.

Big-name companies have begun to split up at an accelerated pace, including General Electric, IBM, and Johnson & Johnson, but such splits are rare for food producers. The last major split in the sector was in in 2012, when Kraft split to create Mondelez.

It is a particularly perilous time in the industry due to rising costs, both for labour and for material. Russia-Ukraine war has pushed grain prices higher and this month, the US reported that inflation is hitting four-decade highs.

Earlier, about 1,400 workers at Kellogg's cereal plants went on strike for nearly three months before winning a new contract with immediate, across the board wage increases and enhanced benefits for all workers. In March, a few hundred other workers at a facility that makes Cheez-It won a new contract with 15 per cent wage increases over three years.

Shares of Kellogg jumped 8 per cent to $73.29 before the opening bell on Tuesday.