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Michigan icon Kellogg plans corporate spin-offs and move to Chicago

cereal boxes
Kellogg’s cereal division will be a standalone business by 2023. It represents about 20 percent of the company’s sales following supply chain issues and a manufacturing strike in 2021. (MDV Edwards / Shutterstock.com)

Kellogg Co. announced Tuesday that it plans to move its headquarters from Battle Creek — where Michigan’s fifth-largest publicly traded company was founded in 1906 — to Chicago as it spins off its businesses into three independent companies.

The cereal division, led by brands like Corn Flakes and Special K, will remain in Battle Creek, the company said.

However, its growing snack division — which is selling almost five times as much chips as cereal — will make the move to Illinois as the company turns its focus to growing international sales of products like Cheez-It and Pringles. 

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That headquarters move is likely to have financial implications for the state. About 80 percent of corporate revenue is tied to what will become the new Chicago-based company.

Kellogg — one of Michigan’s most iconic companies, along with Ford and General Motors — expects to roll out details of its plans in coming months, officials said Tuesday morning. The company, which recently went through a bitter union strike, is the second-leading cereal maker in the U.S.

The names of new spin-off companies have not been determined. Also unclear is how the Kellogg brand will make the transition by the time it is finalized by the end of 2023.

The city of Battle Creek — the southwest Michigan city east of Kalamazoo along I-94 where the $22.8 billion company and some of its global manufacturing remain — did not immediately comment on the news early Tuesday. The city manager’s office told Bridge Michigan on Tuesday it will not comment on the decision until it holds a press event on Wednesday.

Kellogg is the second-largest employer in the Battle Creek area, according to Battle Creek Unlimited, an economic development organization. Its 2,000 employees is second only to Denso, an auto parts manufacturer.

In a statement, Kellogg called the move the “bold next steps we’re taking to transform our portfolio.”

 

The company said it would break into three new new divisions: 

• A “Global Snacking Co.,” with about $11.4 billion in net sales.

• A “North America Cereal Co.,” with about $2.4 billion in net sales after a year with supply chain constraints and a strike that affected four of its U.S. factories. 

• And “Plant Co.,” building around the Morningstar Farms vegetable patty brand, with about $340 million in net sales.

“These businesses all have significant standalone potential, and an enhancedfocus will enable them to better direct their resources toward their distinct strategic priorities,” Steve Cahillane, Kellogg Co.’s chairman and CEO, said Tuesday morning in a statement.

“In turn, each business is expected to create more value for all stakeholders, and each is well-positioned to build a new era of innovation and growth.”

Unclear is how many jobs may be moving from Battle Creek to Chicago. All three company leadership decisions will be announced later, the company said. 

As part of the strike settlement in 2021, the company pledged to union officials that it would make no plant closings through October 2026, according to NPR reports.

The company’s stock price [NYSE: K] rose 2.34 percent after one hour of trading on Tuesday, climbing to $69.12 per share.

Bridge Michigan intern Jared Ramsey contributed to this story.

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