- Kellogg Company remains on track to complete the previously
announced separation during the fourth quarter of 2023
- At that time Kellogg Company will separate into Kellanova
and WK Kellogg Co, with existing Kellogg shareowners receiving
shares in the new WK Kellogg Co
- The Form 10 filing provides information about WK Kellogg
Co's portfolio, business dynamics, strategy, and historical
carve-out financial statements
- As previously announced, Kellanova and WK Kellogg Co will
jointly host an investor event on August
9, at which time both companies will present their
strategies, capital structures, capital allocation priorities, and
financial outlooks
BATTLE
CREEK, Mich., July 24,
2023 /PRNewswire/ -- Kellogg Company (NYSE: K)
today announced the filing of a Form 10 registration statement with
the U.S. Securities and Exchange Commission (SEC) relating to the
Company's previously announced plan to separate into two
businesses:
- Kellanova, with about $12.6
billion in 2022 net sales1, will be a leading
company in global snacking, international cereal and noodles, and
North America frozen foods, with
iconic, world-class brands and strong growth momentum and
profitability;
- WK Kellogg Co, with about $2.7
billion in 2022 net sales, will be a leading cereal company
in the U.S., Canada, and
Caribbean, with a portfolio of
iconic, world-class brands, leading market positions, and
compelling opportunities for investment and profit growth.
"Today's Form 10 filing marks another important step toward our
planned separation into two established and special businesses,"
stated Steve Cahillane, Kellogg
Company's Chairman and Chief Executive Officer. "As stand-alone
companies, Kellanova and WK Kellogg Co will benefit from an
enhanced focus that will enable them to better direct their
resources toward their distinct strategic priorities, unlocking
value for shareowners."
Update on the Previously Announced
Separation
On June 21, 2022, the Company
announced that its Board of Directors had approved a plan to pursue
a separation of its North American cereal business ("WK Kellogg
Co"), via a tax-free spin-off. The Company is targeting to
complete the separation transaction during the fourth quarter of
2023, subject to certain customary conditions, including final
approval by the Board of Directors and effectiveness of the Form 10
registration statement.
The result will be two independent public companies, each better
positioned to unlock their full standalone potential by:
- Focusing on their distinct strategic priorities, with financial
targets that best fit their own markets and opportunities;
- Executing with increased agility and operational flexibility,
enabling more focused allocation of capital and resources in a
manner consistent with those strategic priorities;
- Realizing improved outlooks for profitable growth; and
- Shaping distinctive corporate cultures, rooted in Kellogg
Company's strong values, and rewarding career paths for employees
of each company.
The Form 10 provides important information about WK Kellogg Co's
portfolio, business dynamics, strategy, risk factors, and
management. The filing provides certain WK Kellogg Co financial
statements, including historical carve-out financial statements and
pro forma financial statements, and a discussion of the key drivers
of WK Kellogg Co's past financial performance.
A copy of the Form 10 is available on the SEC's website at
www.sec.gov as filed by WK Kellogg Co. The Form 10, filed on
July 24, 2023, is subject to change
and will be made final prior to the effective date of the
spin. In addition to the public filing of the Form 10,
Kellogg Company has posted supplemental business and other
information about Kellanova and WK Kellogg Co to its investor
website at http://investor.kelloggs.com. A dedicated website
providing ongoing information about the separation is available
at https://www.unleashingourpotential.com.
About the Two New Companies
WK Kellogg Co
The Company is prepared to separate its
U.S., Canada, and Caribbean cereal business in a tax-free spin
off to Kellogg shareowners during the fourth quarter of 2023. This
company will be called WK Kellogg Co, and its stock will be traded
on the New York Stock Exchange, under the ticker symbol
"KLG".
WK Kellogg Co has a portfolio of powerful brands with leading
market positions, led by iconic brands such as Frosted
Flakes, Special K, Froot Loops, Raisin
Bran, Frosted Mini-Wheats, Kashi, and more. It has a
century-long legacy of innovation in foods and marketing, a scaled
infrastructure, and an experienced leadership team. As a
stand-alone company, WK Kellogg Co will benefit from greater
operational focus and fit-for-purpose strategy and resource
allocation. Management believes that this will enable it to invest
in substantially improving its profit margins over the next few
years, including the optimization of its manufacturing network,
while also improving its competitiveness and share of market.
More details regarding WK Kellogg Co's strategy, capital
structure, capital allocation, and financial outlooks will be
shared during an investor event on August 9,
2023.
"We have made great strides toward establishing WK Kellogg Co as
an independent business," said Gary
Pilnick, WK Kellogg Co's Chief Executive Officer Designate.
"Our new team is in place, and we are building a focused company
that we believe has outstanding prospects. We are excited to
share our strategy and outlook in a few weeks."
Kellanova
Following the spin-off of WK Kellogg Co, the
remainder of today's Kellogg Company will change its name to
Kellanova, and will continue to be traded on the New York Stock
Exchange under the ticker K.
Kellanova will feature a portfolio oriented toward snacking,
with a global footprint and significant presence in fast-growing
emerging markets. In 2022, global snacks and emerging markets
collectively represented about 80% of Kellanova's net
sales.
Kellanova's portfolio will be comprised of the following
growth-oriented categories:
- Snacks. About 60% of Kellanova's 2022 net sales came
from snacks. In addition to participating in categories with
above-average growth, including salty snacks, crackers, and
portable wholesome snacks, Kellanova competes with beloved and
highly differentiated brands, including Pringles,
Cheez-It, Pop-Tarts, Rice Krispies Treats, and
more. Kellanova's snacks business is global, with roughly 15% in
emerging markets. Excluding the impact of a 2019 divestiture,
Kellanova's global snacks business grew its net sales on an organic
basis at a compound annual growth rate of approximately 8% between
2019 and 20222.
- International Cereal. International cereal represented
about 20% of Kellanova's 2022 net sales, with half of that
percentage coming from growing emerging markets. This business
retains all of its strong Kellogg's brands, including
Frosties/Zucaritas, Tresor/Krave, Choco
Krispies, Crunchy Nut, Corn Flakes, Nutri-Grain, and
more. Kellanova's cereals business grew its net sales on an organic
basis at a compound annual growth rate of approximately 5% between
2019 and 20222.
- Noodles & Other. This business in Africa accounted for just over 10% of
Kellanova's 2022 net sales, and offers exceptional near-term and
long-term growth as we expand in this emerging market. Kellanova's
noodles and other business grew its net sales on an organic basis
at a compound annual growth rate of approximately 25% between 2019
and 20222.
- Frozen Foods. Representing just under 10% of Kellanova's
2022 net sales, this business is predominantly comprised of
Eggo, our leading brand of frozen waffles, pancakes, and
French toast, and MorningStar Farms, our leading brand of
plant-based foods. Kellanova's frozen foods business grew its net
sales at a compound annual growth rate of approximately 2% between
2019 and 20222.
As a stand-alone company, Kellanova, too, will benefit from
greater operational focus and fit-for-purpose strategy and resource
allocation, investing behind its differentiated brands to deliver
consistently strong net sales and earnings growth over time.
More details regarding Kellanova's strategy, capital structure,
capital allocation, and financial outlook will be shared during an
investor event on August 9, 2023.
"The Kellanova portfolio is already geared toward growth,
demonstrating underlying momentum, " said Steve Cahillane. "What is notably exciting is
that this performance will be enhanced by a refreshed strategy,
higher profit margins, and a portfolio that is even more oriented
toward advantaged markets, categories, and brands."
Upcoming Events and Milestones
- Second Quarter Earnings Release – August 3, 2023. As previously announced,
Kellogg Company will release its financial results for its second
quarter 2023.
- Day@K Investor Event – August 9,
2023. As previously announced, Kellogg Company will host
an investor event at the New York Stock Exchange, which also will
be webcast publicly. The day will be comprised of two sessions: WK
Kellogg Co management will host a breakfast and meeting with
analysts and investors, and Kellanova management will follow with a
lunch and meeting with analysts and investors.
- Barclays Consumer Staples Conference – September 6-7, 2023. In Boston, representatives of management from
both Kellanova and WK Kellogg Co will meet with investors.
- Execution of the Separation Transaction – Fourth Quarter,
2023. Subject to customary approvals, the Company expects the
spin-off transaction to be completed during the fourth quarter of
2023. Upon completion of the separation, shareowners as of the
record date will own 100% of the equity in both of the publicly
traded companies.
About Kellogg Company
At Kellogg Company (NYSE: K), our vision is a good and just
world where people are not just fed but fulfilled. We are creating
better days and a place at the table for everyone through our
trusted food brands. Our beloved brands include
Pringles®, Cheez-It®,
Special K®, Kellogg's Frosted
Flakes®, Pop-Tarts®, Kellogg's
Corn Flakes®, Rice Krispies®,
Eggo®, Mini-Wheats®,
Kashi®, RXBAR®, MorningStar
Farms® and more. Net sales in 2022 were over
$15.3 billion, comprised principally
of snacks as well as convenience foods like cereal, frozen foods,
and noodles. As part of our Kellogg's® Better Days
Promise ESG strategy, we're addressing the interconnected
issues of wellbeing, climate and food security, creating Better
Days for 3 billion people by the end of 2030 (from a 2015
baseline). Visit www.KelloggCompany.com.
Forward-Looking Statements
This press release contains a number of forward-looking
statements. Forward-looking statements include predictions of
future results or activities and may contain the words "expect,"
"believe," "will," "can," "anticipate," "estimate," "project,"
"should," or words or phrases of similar meaning, including but not
limited to: The anticipated separation of WK Kellogg Co,
future operating and financial performance, product development,
market position and business strategy. The viewer is cautioned not
to rely on these forward-looking statements. Forward-looking
statements by their nature address matters that are, to different
degrees, uncertain, and are subject to risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those indicated or
anticipated by such forward-looking statements. The inclusion of
such statements should not be regarded as a representation that
such plans, estimates or expectations will be achieved. Important
factors that could cause actual results to differ materially from
such plans, estimates or expectations include, among others, (1)
the ability to effect the separation transaction described above
and to meet the conditions related thereto, (2) the ability of WK
Kellogg Co to succeed as a standalone publicly traded company, (3)
potential uncertainty during the pendency of the separation
transaction that could affect the Company's financial performance,
(4) the possibility that the separation transaction will not be
completed within the anticipated time period or at all, (5) the
possibility that the separation transaction will not achieve its
intended benefits, (6) the possibility of disruption, including
changes to existing business relationships, disputes, litigation or
unanticipated costs in connection with the separation transaction,
(7) uncertainty of the expected financial performance of the
Company or the separated WK Kellogg Co following completion of the
separation transaction, (8) negative effects of the announcement or
pendency of the separation transaction on the market price of the
Company's securities and/or on the financial performance of the
Company, (9) evolving legal, regulatory and tax regimes, (10)
changes in general economic and/or industry specific conditions,
(11) actions by third parties, including government agencies and
(12) other risk factors as detailed from time to time in the
Company's reports filed with the SEC, including the Company's
Annual Report on Form 10-K, periodic Quarterly Reports on Form
10-Q, periodic Current Reports on Forms 8-K and other documents
filed with the SEC. Copies of these filings are available online at
www.sec.gov, www.investor.kelloggs.com or on request from the
Company. The foregoing list of important factors is not exclusive.
Any forward-looking statement made in this press release speaks
only as of the date of this press release. The Company does not
undertake to update any forward-looking statement as a result of
new information or future events or developments.
Non-GAAP Financial Measures
In this press release, we sometimes use information derived from
consolidated financial data based on preliminary allocation
assumptions related to the spin-offs, but not presented in our
financial statements prepared in accordance with U.S. generally
accepted accounting principles (GAAP). Certain of these data
are considered "non-GAAP financial measures" under the U.S.
Securities and Exchange Commission rules. These non-GAAP financial
measures supplement our GAAP disclosures and should not be
considered an alternative to the GAAP measure. Our management team
consistently utilizes a combination of GAAP and non-GAAP financial
measures to evaluate business results, to make decisions regarding
the future direction of our business, and for resource allocation
decisions, including incentive compensation. As a result, we
believe the presentation of both GAAP and non-GAAP financial
measures provides investors with increased transparency into
financial measures used by our management team, especially in
connection with the spin-offs, and improves investors'
understanding of our underlying operating performance and in their
analysis of ongoing operating trends.
Footnotes:
1 Estimates based on excluding carve-out
financials for WK Kellogg Co.
2 Please refer to the reconciliation of non-GAAP
measures to the most directly comparable GAAP measure, as provided
in the Appendix to Kellogg Company's presentation at the CAGNY
Investor Conference, February 22,
2023, found at
https://s1.q4cdn.com/24314854/files/doc_events/2023/Feb/22/k-cagny-print-slides.pdf
[K-FIN]
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SOURCE Kellogg Company