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KELLOGG COMPANY ANNOUNCES SEPARATION OF TWO BUSINESSES AS BOLD NEXT STEPS IN PORTFOLIO TRANSFORMATION
(PRNewsfoto/Kellogg Company)
NEWS PROVIDED BY
Kellogg Company
Jun 21, 2022, 07:00 ET
The Company plans to separate into three independent companies, by spinning off its U.S., Canadian, and Caribbean cereal and plant-based businesses, which collectively represented approximately 20% of its net sales in 2021
The remaining business, which represented about 80% of net sales in 2021, is focused on global snacking, international cereal and noodles, and North America frozen breakfast
This transaction represents another bold action toward transforming Kellogg's portfolio to further enhance performance and value
The proposed separations create greater strategic, operational, and financial focus for each company and its stakeholders, and will build on Kellogg's current momentum
BATTLE CREEK, Mich., June 21, 2022 /PRNewswire/ -- Kellogg Company (NYSE: K) today announced that its Board of Directors has approved a plan to separate its North American cereal and plant-based foods businesses, via tax-free spin-offs, resulting in three independent public companies, each better positioned to unlock their full standalone potential. The three companies, whose names will be determined later, would be the following:

"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.
"Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value. This has included re-shaping our portfolio, and today's announcement is the next step in that transformation," said Steve Cahillane, Kellogg Company's Chairman and Chief Executive Officer. "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."

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“Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value.”

This is what it’s all about. Priority number one. The share holders.
The 3 “divisions” we will call them since they are the same company are being separated for several reasons… Tax sheltering of profits.
…. The consolidation of North American cereals union plants to non union sites. If sued for breaching any labor agreements only the far less valuable North American cereal would be exposed. The vastly more profitable Global Snacks would be considered an entirely different entity and not liable for any damages sought in a future lawsuit involving their cereal brands. Kelloggs is facing three 4 problems with its cereal brands

Labor costs more expensive for the company
Product costs more expensive for the customer.
Cereal becoming less profitable in general as sales continue to drop
The four major cereal plants they have are all union. This last strike they experienced the four plants presented a united front against Kelloggs instead of an individual plant going on strike, they all did recently. Kelloggs signed an agreement this last time but make no mistake… they will not be put in a position like that again where they were not in the position of power. Let’s be practical here… they are already consolidating smaller factories that were union and moving their brand to non union sites. They have done that with two brands within the last year. Next time the union contract is up don’t be surprised if they don’t say “no thank you we are not interested in signing another labor agreement with your union” and that will be that. If sued they can as I already explained, absorb a loss to that “division” because it only accounts for 2 billion of their 14 billion in profits. This is chess not checkers.

Need to know more. Don’t feel like today’s presentations provided enough information to understand how it will effect the employees. I know the company prides itself on transparency so I’m sure the next few days should better define their plan. I think it should be anyways especially during these times when mental health is at the forefront of everyone’s worlds coming off of covid. 18 months of uncertainty and insecurity around our pay, jobs and benefits is a lot to put people through. Best to be upfront. As right now the job market is competitive for talented people. With inflation on the rise we also have our families to think about.

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