Sunday, May 19, 2024

Separation into two companies approved by Kellogg’s

Kellogg Company’s Board of Directors has formally approved its separation into two independent, publicly traded companies, Kellanova and WK Kellogg Co.

Upon completion on October 2 2023, Kellogg Company will be renamed Kellanova, and will continue to trade on the New York Stock Exchange (NYSE) under the ticker symbol ‘K’, while WK Kellogg Co is expected to begin trading on the NYSE under the ticker symbol ‘KLG’.

Kellogg shareowners will receive 1 share of WK Kellogg Co (KLG) for every 4 shares of Kellogg Company (K) owned.

“After more than a year of comprehensive planning and execution, we are more confident than ever that the separation will produce two stronger companies and create substantial value for shareowners,” stated Steve Cahillane, Kellogg Company’s chairman and Chief Executive Officer.

It is said Kellanova will feature a growth-oriented portfolio that is weighted toward snacks and emerging markets, and will be led by highly differentiated brands with considerable opportunity for expansion. It is projected to generate net sales of approximately $13.4-$13.6 billion and adjusted-basis EBITDA of approximately $2.25-$2.3 billion in 2024.

Kellanova expects to deliver long-term annual growth rates of 3-5% for net sales (organic basis), 5-7% for operating profit (currency neutral and adjusted basis), and 7-9% for earnings per share (currency neutral and adjusted basis), including in 2024 on a like-for-like basis excluding WK Kellogg Co.

“We are looking forward to a new era as Kellanova, marked by a more growth-oriented portfolio, a renewed vision and strategy, and an energized organization grounded by a winning culture and our founder’s values,” said Mr. Cahillane, who will remain chairman and Chief Executive Officer of Kellanova. “These elements build on what has already been a track record of strong and consistent financial performance for the Kellanova portfolio.”

Building on a foundation of iconic brands and a leading share position in North American cereal, WK Kellogg Co will focus and integrate its commercial strategy and execution, while modernizing its supply chain, all of which it expects will result in improved competitiveness, profitability, and cash flow.

WK Kellogg Co projects net sales of approximately $2.7 billion and adjusted-basis EBITDA of approximately $255-$265 million in 2024. It expects to improve its adjusted-basis EBITDA margins by 500 basis points by the end of 2026, through supply chain modernization and a stable top-line trajectory.

“WK Kellogg Co has a 117-year legacy of innovation and the soul of a start-up, with an organization incredibly energized by our future,” remarked Gary Pilnick, who will serve as WK Kellogg Co’s chairman and Chief Executive Officer following the separation.

“As a standalone company, we will benefit immediately from the executional advantages of increased focus and end-to-end integration, while we modernize our supply chain and substantially improve our profit margins. We’re on a profitable journey to take this great business to the next level.”

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