Kellogg Co. announced plans to split into three independent companies focused on cereals, snacks, and plant-based foods.
Breaking up its portfolio via tax-free spin-offs will give each independent company (whose names will be determined later) a better opportunity to grow, the Michigan-based company said in a statement.
Kellogg shares jumped 8.9% in premarket trading Tuesday on the news.
The three separate businesses include:
*"Global Snacking Co.", with about $11.4 billion* in net sales, will be a leading company in global snacking, international cereal and noodles, and North America frozen breakfast, with iconic, world-class brands and strong underlying growth momentum and profitability;
*"North America Cereal Co.", with about $2.4 billion* in net sales, will be a leading cereal company in the U.S., Canada, and Caribbean, with a portfolio of iconic, world-class brands and compelling opportunities for investment and profit growth; and
*"Plant Co.", with about $340 million* in net sales, will be a leading, profitable, pure-play plant-based foods company, anchored by the MorningStar Farms brand, with a significant opportunity to capitalize on strong long-term category prospects by investing further in North America penetration and future international expansion.
Steve Cahillane, Kellogg Company's Chairman and CEO, said the split into three independent companies would allow each to "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," Cahillane said.
Kellogg said proposed spin-offs are intended to result in tax-free distributions of North America Cereal Co. and Plant Co. shares to Kellogg shareowners. They would receive shares in the two spin-off entities. The spin-offs are expected to be completed by the end of 2023.
The last major split of food producers was in 2012 when Kraft split to create Mondelez. Companies have started to split operations, including IBM, General Electric, and Johnson & Johnson.