Kellogg Co. K, -0.19% shares jumped 8.1% in Tuesday premarket trading after the food company announced a plan to split into three businesses:
“Global Snacking Co.,” which will represent about $11.4 billion in sales and include international cereal and noodles, North American frozen breakfast, as well as snacks; “North America Cereal Co.,” which represents about $2.4 billion in sales and includes U.S., Canada, and Caribbean cereals; and “Plant Co.,” a business of about $340 million anchored by the MorningStar Farms brand and focused on plant-based foods. The split will be executed through tax-free spin-offs with names of the new businesses to be determined. Kellogg says the move comes after a portfolio transformation that puts each distinct business in a position to better focus on its strengths and priorities. Steve Cahillane will remain chief executive of the Global Snacking business, which will include Cheez-It, Pop-Tarts, Kellogg’s Rice Krispies Treats. North America Cereal will include Frosted Flakes, Froot Loops, Mini-Wheats and focus near term on restoring profit and and restoring market share following the 2021 supply chain disruptions. North America Cereal Co. and Plant Co. will remain based in Battle Creek, Mich. while Global Snacking will be based in both Battle Creek and Chicago. The spin-off of North America Cereal Co. is expected to precede Plant Co., but both are expected to be completed by the end of 2023. Kellogg stock has rallied 4.8% for the year to date while the benchmark S&P 500 index SPX, +0.22% is down nearly 23%.