Kellogg Company announced plans to split on Tuesday, saying it will split into three separate companies focused on cereals, plant-based foods and snacks. The snack company will be headquartered in Chicago, the company said in a press release, with campuses in both the city and Battle Creek, Michigan.
The news comes a week after Caterpillar, a mining and construction equipment maker, announced plans to move its corporate headquarters from Deerfield to Irving, Texas, and less than two months after Boeing announced plans to relocate its headquarters. Chicago to Arlington, Virginia.
The corporate headquarters in Chicago will be located at 412 N. Wells St., where Kellogg’s offices are located. The company also has offices in Naperville and currently employs more than 300 people in the Chicago area.
Kellogg’s snack division, which includes brands such as Pringles and Rice Krispies Treats, accounted for 80 percent of Kellogg’s net sales in 2021, the company said. Cereal and plant companies, which together accounted for 20% of net sales, will be headquartered in Battle Creek. All three companies will be listed on the stock exchange. The names of each company have not yet been announced.
“All of these companies have significant stand-alone potential and an improved approach will allow them to better direct their resources toward their various strategic priorities,” Kellogg President and CEO Steve Cahillane said in a statement.
“In turn, each company is expected to create more value for all stakeholders and each is well positioned to build a new era of innovation and growth.”
In a tweet on Tuesday, Mayor Lori Lightfoot said she had spoken to Cahillane and was “delighted” that the snack company’s headquarters were in its Chicago offices “by the end of 2023.”
In an interview, Cahillane said that Kellogg’s footprint in Chicago, the city’s infrastructure for international travel, and its culture of food innovation came into play when deciding where the corporate headquarters of Chicago would be located. the snack company.
He said that from now on, the company will not require employees to relocate.
“After 18 months, when businesses are up and running and new people are joining the organization, there’s a very real chance they’ll want to be located in Chicago,” he said.
Michael Fassnacht, CEO of World Business Chicago, the city’s public-private economic development agency, echoed Cahillane’s comments about the city as a center for food innovation.
“It just reaffirms Chicago’s position as a global capital of food innovation,” he said. “I think it’s the result of all our focus on food and (agriculture). It’s one of our key industries.”
Over the past five years, the number of Chicago-based food or agriculture-related businesses has grown from less than 100 to more than 400, Fassnacht said.
Fassnacht said the new headquarters could have an effect on the industry, encouraging more businesses and jobs in Chicago.
One of the key benefits that companies bring to a city or state is jobs, and the location of a corporate headquarters does not always translate into a large number of functions, said Harry Kraemer, clinical professor of management and organizations at Northwestern University’s Kellogg School of Management and former CEO of Baxter International. He noted that Kellogg already has an office in Chicago.
But he agreed with Fassnacht that the relocation of the snack company’s headquarters to the city could have positive effects on other companies.
“It’s not so much the direct impact of what they do, but the potential signal it brings to other people who are trying to figure out what to do,” he said.
Likewise, he said Boeing and Caterpillar’s departures are not expected to mean the loss of thousands of jobs in Illinois, but they could make other companies think twice before moving to Illinois. .
Fassnacht said the departures of Caterpillar and Boeing do not represent a trend of corporate departures from Chicago and Illinois, but exceptions that reflect specific decisions of these companies.
“We had a lot of wins and also a few defeats,” Fassnacht said. “Boeing and Caterpillar were not welcome news. But overall I think this year looks like a very strong year, and Kellogg’s news today proves it.”
Fassnacht said there were no municipal tax incentives to draw the snack company and did not know of any state incentives. Lightfoot spokesmen and the offices of Governor JB Pritzker did not immediately respond to questions about whether there were incentives.
Kellogg shares rose more than 2% in market trading on Tuesday.
Cahillane will continue as president and CEO of the snack company, which had an estimated net sales of $ 11.4 billion last year, Kellogg said. The company said the grain and vegetable derivation management teams will be announced at a later date.
Cahillane said that in the future, the snack company will “continue to innovate” around its big brands. The acquisitions will be part of the company’s strategy, he said. Pointing to the company’s introduction of Cheez-Its in Canada and Brazil, Cahillane said the company will look for “more and more opportunities” for the international expansion of its major US brands.
Associated Press contributed.
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