Kellogg will be divided into three companies
22 June 2022
A Costco warehouse in Homestead, Pennsylvania featured an aisle filled with open boxes of Frosted Flakes cereal.
The Kellogg Company, which is known for its cereals such as Frosted Flakes, Rice Krispies, and Eggo, will soon be divided into three companies: those specializing in snacks, plant-based foods, and cereals.
According to Kellogg’s, which also owns MorningStar Farms, the spinoff of the yet-to-be-named cereal and plant-based food firms should be completed by the end of the following year. This is the expectation of Kellogg’s.
In 2021, Kellogg’s generated net sales of $14.2 billion, with its snack division contributing $11.4 billion to the company’s total revenue. The total amount of money spent on cereal was $2.4 billion, with plant-based cereals making up $340 million of that total.
The Chief Executive Officer of Kellogg, Steve Cahillane, stated that each of these three companies possesses a significant amount of potential on its own. They will be able to better concentrate their resources on the particular strategic priorities that are important to them if they have a better focus.
Shareholders will receive a proportional number of shares in the two new companies based on the amount of Kellogg stock they currently own.
The corporate headquarters of the company are moving from Battle Creek, Michigan, to Chicago. However, the company’s snack division, which accounts for approximately 80% of current sales, will continue to maintain dual headquarters in both cities. The three international headquarters of Kellogg will continue to operate out of their current locations in Europe, Latin America, and Asia Pacific, Middle East, and Africa respectively.
Companies such as General Electric, IBM, and Johnson & Johnson have started to split up at an increased rate, whereas food producers have seen fewer companies in their industry go through this process. The most recent significant division in the industry took place in 2012, when Mondelez was formed through the merger of Kraft and Mondelez. AP
