The owner of iconic Corn Flakes and Nutri-Grain cereals, formerly known as the Kellogg Company, has split in two and renamed Kellanova and WK Kellogg Co – but Australian consumers are unlikely to notice the change.
Key points:
- Kellanova last year unveiled plans to split itself into companies focused on snacks, North American cereals and its plant-based meat.
- Australian products will retain the recognizable Kellogg logo
- Shares of both companies fell on the first day of trading
Kellanova last year unveiled plans to split into separate companies focused on snacks, North American cereals and its plant-based meat business.
CEO Steve Cahillane said in a statement that the Kellanova name signals the company’s ambition to build on the 117-year-old brand.
“The ‘Kell’ openly recognizes our enduring connection with the Kellogg Company, while ‘anova,’ which combines ‘a’ and the Latin word ‘nova,’ meaning ‘new,’ signals our ambition to continually evolve as a company innovative new generation. , a global snacking powerhouse,” he said.
However, despite the name change, Australian products will retain the recognizable Kellogg logo.
The name WK Kellogg Co is a nod to the company’s founder, Will Keith Kellogg.
“Even though the company name has changed to Kellanova, the Kellogg’s brand will remain on its products globally and in Australia,” said Anthony Holme, managing director of Kellanova ANZ.
“Consumers will still be able to purchase the brands they know and love, without changing the distinctive and globally recognized brand name ‘Kellogg’s’.
“For example, Kellogg’s will remain on Special K and other cereal boxes in Australia.”
Mr Cahillane said the company had entered “a new era with a new name and new ambition”.
“We are starting from a position of strength rooted in a century-old heritage as we embark on a journey to realize our vision of becoming the most successful snack-led powerhouse in the world. »
Stock prices fall below new marks
The name change, however, did not perform well on the stock market.
Kellanova shares fell more than 7 percent Monday after the packaged food giant completed the spinoff of its North American cereal business into a new standalone entity called WK Kellogg Co.
Under the separation agreement, Kellanova shareholders received one share of WK Kellogg Co common stock for every four shares of Kellanova stock held as of Sept. 21, a statement said.
Kellanova shares fell to $51.83 ($82.41), down 7.2 percent, after opening at $55.70, while WK Kellogg Co fell more than 11 percent and was last at $13.79.
Both companies are listed on the New York Stock Exchange and trade for the first time under their new corporate names.
“What we’re seeing today with the decline in Kellanova and WK Kellogg shares is a puzzle problem; in other words, the pieces simply don’t fit into many institutional and strategic portfolios,” Michael said, investment director at Running Point Capital Advisors. Ashley Schulman, in California.
Kellanova expects to generate up to $13.6 billion in annual sales from its snack brands, including Pringles, Cheez-It and Pop-Tarts.
Earlier in February, the company announced it would keep its plant-based business, known for its MorningStar Farms brand, in-house.
WK Kellogg Co’s cereal brands, including Kellogg’s, Froot Loops, Frosted Flakes and Rice Krispies, are expected to generate annual revenue of about $2.7 billion.
Several analysts, including from Jefferies and Piper Sandler, have lowered their price target for Kellanova’s stock citing its gloomy sales outlook and low-margin business. The median price target for the 18 analysts covering Kellanova’s stock is US$68.50 and their average recommendation is “hold”, according to LSEG data.
“We expect near-term volatility in both companies’ stocks,” Arun Sundaram of CFRA Research said in a statement.
“Investors will make key decisions in the days, weeks and months ahead. Do they want to remain invested in both companies, allocate a larger portion of their investment to one of the two companies, or divest from both?”
