Kellogg Co., based in Battlecreek, Michigan, announced on Tuesday that it will be splitting itself into three separate companies by the end of next year.
The company’s stock shot up 8.9% in premarket trading as a result of the news before coming back to earth by the end of the day.
Kellogg issued a press release stating that the separations would “create greater strategic, operational, and financial focus for each company and its stakeholders.”
It plans to create a standalone company focusing on “global snacking, international cereal and noodles, and North America frozen breakfast.” This prospective entity will be concerned with what currently accounts for roughly 80% of Kellogg’s business, including brands like Pop-Tarts and Famous Amos.
The other two eventual spinoffs are responsible for the remaining 20% of Kellogg’s current business.
One will specialize in cereals. Kellogg CEO Steve Cahillane told investors on a conference call that it “will be solely dedicated to winning in cereal and will not have to compete [internally] for [company] resources against the high-growth snacking business,” according to AP News.
The other spinoff company would focus on plant-based foods “anchored by the MorningStar Farms brand.” However, Kellogg’s press release noted that the company might sell off its interests in that market instead.
Kellogg’s move comes at a time of uncertainty as supply-chain and labor disruptions continue to plague the food industry.
As reported in The Dallas Express, Russia’s invasion of Ukraine had a deleterious effect on the global grain supply, driving up prices by limiting the amount of Ukrainian grain entering the world market.
The problem was further compounded by Western sanctions against Russian fertilizer, which caused that commodity to increase in price as well.
Additionally, the food industry has seen various labor shortages and work stoppages in recent years.
Kellogg Co. recently had to deal with its own labor disturbances in 2021 when workers at four of its cereal plants went on strike for 11 weeks.