Many companies have had to adapt in the face of the pandemic and supply-chain challenges, and Kellogg is one of the latest to switch up its business strategy.
The company announced Tuesday that it will separate into three independent companies, transforming its cereal and plant-based businesses into distinct entities and keeping the focus of its remaining business on snacking, cereal and noodles across the globe, and frozen breakfast in North America.
Per CNBC, Kellogg shares soared 6.5% in premarket trading on the announcement.
“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” Steve Cahillane, Kellogg Company’s chairman and CEO, said in the statement. “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 businesses have yet to be named, and management teams for the new businesses have yet to be announced.
Kellogg is also considering the eventual sale of its plant-based business. Together, the company’s plant-based and cereal businesses account for just 20% of Kellogg’s total revenue. Kellogg’s global snacking business and North American frozen breakfast brands, which include brands such as Pringles and Eggo, make up the rest, bringing in $11.4 billion last year.
Cahillane will stay on as CEO of the global snacking company, and headquarters for the three businesses will remain the same. The North American cereal company, which includes brands such as Froot Loops and Special K, and the plant-based food company are located in Battle Creek, Michigan, and the global snacking company is in Chicago, with an additional campus in Battle Creek.
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Kellogg Company is up 7.5% year over year this morning, and Cahillane told CNBC that the company has yet to determine how it will allocate its dividends among the three businesses.