Kellogg is splitting into three different companies, the historic Battle Creek, Michigan-based firm announced.
The first company will include Kellogg’s North America cereal unit, the snacks unit will become a second company and a new plant-based business anchored on its MorningStar Farms brand will become the third unit.
“These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities,” CEO Steve Cahillane said in a statement. “Kellogg has been on a successful journey of transformation to enhance performance and increase long-term shareowner value.”
Kellogg shares rose more than 7% in premarket trading after the surprising announcement. The tax-free spinoffs are expected to be completed by the end of 2023. New names for the companies will be announced later.
The snack business will be the largest new company after almost 60% of the company’s sales came from brands like Pop-Tarts, Nutri-Grain, Pringles and Cheez-It.
Kellogg’s had net sales of $14.2 billion in 2021, with $11.4 billion by its snack division. Cereal accounted for another $2.4 billion while plant-based sales totaled around $340 million.
Kellogg said it would explore other options for its plant-based business, including a possible sale.