BATTLE CREEK, MICH. — The Kellogg Co.’s board of directors have approved a plan to break the company up into three independent businesses — global snacking, North American cereal and plant-based foods. The proposed breakup is scheduled to be completed by the end of 2023, according to the company.
“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value,” said Steve Cahillane, chairman and chief executive officer. “This has included re-shaping our portfolio, and today’s announcement is the next step in that transformation.
“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth.”
The global snacking business will have approximately $11.4 billion in sales and include Kellogg’s snacks, international cereal, noodles and North American frozen breakfast products. The business will split its headquarters between Battle Creek, Mich., and Chicago.
Nearly 60% of its net sales will come from global snacks, including such brands as Pringles, Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats, Nutri-Grain and RXBAR, among others. Less than a quarter of its net sales will come from cereal in international markets and such brands as Kellogg's, Frosties, Zucaritas, Special K, Tresor, Krave, Coco-Pops and Crunchy Nut.
About 10% of its net sales come from noodles in Africa, and the remainder will come from frozen breakfast and the Eggo brand.
North American cereal will have about $2.4 billion sales and include cereal brands in the United States, Canada and the Caribbean. The cereal businesses portfolio will include Kellogg’s, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked.
The plant-based foods business will include Kellogg’s MorningStar Farms brand and have approximately $340 million in sales.
Management teams to lead both the North American cereal and plant-based foods businesses will be announced at a later date, according to the company. Both initially will have its headquarters in Battle Creek.
Kellogg Co. said breaking the business up into three independent companies will allow them to focus on specific strategic priorities, executive with agility and operational flexibility and shape distinctive corporate cultures.
The spin-offs are intended to result in tax-free distributions of North American cereal and plant-based foods shares to Kellogg Co. shareowners. Shareholders would receive shares in the two spin-off entities on a pro-rata basis relative to their Kellogg holdings at the date for each spin-off, according to the company.