By Chibuike Oguh and Granth Vanaik
NEW YORK (Reuters) – Shares of Kellanova fell more than 7% on Monday after the packaged food giant, previously known as Kellogg Company, completed the spinoff of its North American cereal business into a new standalone entity called WK Kellogg Company.
Under the separation agreement, Kellanova shareholders received one share of WK Kellogg common stock for every four shares of Kellanova stock held as of September 21, a statement said.
Kellanova shares fell to as low as $51.83, down 7.2%, after opening at $55.70, while WK Kellogg Company dropped by more than 11% and was last at $13.79. Both companies are listed on the New York Stock Exchange and are trading for the first time under their new corporate names.
Kellanova will retain its place on the benchmark S&P 500 index, while WK Kellogg shares will join the S&P SmallCap 600 index on Tuesday, before market open.
“What we are seeing today with the share declines in Kellanova and WK Kellogg is a jigsaw puzzle problem; in other words, the pieces just don’t fit in many institutional and strategic portfolios,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors in California.
Kellanova had unveiled a plan last year to split itself into three separate companies focused on snacks, North American cereals, and its plant-based meat business.
Kellanova expects to generate up to $13.6 billion in annual sales from its snack brands, including Pringles, Cheez-It, Pop-Tarts. Earlier in February, the company announced that it would keep in house its plant-based business, known for its MorningStar Farms brand.
WK Kellogg Co’s cereal brands, including Kellogg’s, Froot Loops, Frosted Flakes and Rice Krispies, is expected to generate annual sales of about $2.7 billion.
(Reporting by Chibuike Oguh in New York and Granth Vanaik in Bengaluru; Editing by Lance Tupper and Christina Fincher)
