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Kellanova (K) Concludes Business Separation to Fuel Growth

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Kellanova (K - Free Report) , previously known as Kellogg Company, concludes the separation of its North American cereal business, as unveiled before. The move led to the formation of two independent, publicly traded companies, WK Kellogg Co (KLG - Free Report) and Kellanova. The separation was reached via the distribution of all WK Kellogg Co shares to Kellanova common stock shareholders.

The separation reinforces Kellanova’s commitment to becoming the best-performing snacks-led powerhouse globally. The company’s portfolio boasts iconic brands like Pringles, Pop-Tarts, Cheez-It, Kellogg's Rice Krispies Treats, Nutri-Grain, Eggo, RXBAR, MorningStar Farms, Incogmeato, and Gardenburger. It also consists of international cereal brands like Kellogg's, Frosties and Zucaritas to name a few. The Zacks Rank #3 (Hold) company expects to generate net sales of $13.4-13.6 billion in 2024.

Kellanova is committed to delivering growth on increased operational focus, fit-for-purpose strategy and resource allocation. Management expects to enhance profitability through operating leverage, widened scale across emerging markets, productivity and revenue growth management. Although the company’s corporate name has altered to Kellanova, its products around the globe will continue to have the Kellogg's brand.

WK Kellogg Co will focus on ready-to-eat cereal across the U.S., Canada, and Caribbean. Management earlier highlighted that the unit will house a portfolio of leading brands like Kellogg's, Frosted Flakes, Froot Loops, Mini-Wheats, Special K, Raisin Bran, Rice Krispies, Corn Flakes, Kashi and Bear Naked.

WK Kellogg Co is likely to generate 2024 net sales of about $2.7 billion and an adjusted EBITDA in the band of roughly $255-265 million. In the upcoming three years, WK Kellogg Co anticipates achieving a 500-basis point improvement in its adjusted EBITDA margins by 2026-end.

The separation will likely position Kellanova and WK Kellogg Co to unlock their full standalone potential. The move allows both companies to focus on their well-defined strategic priorities and execute greater agility and operational flexibility while creating distinctive corporate cultures.

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