Kellogg's splits into Kellanova and WK Kellogg Co but Australian shoppers may not not

Kellogg's splits into Kellanova and WK Kellogg Co but Australian shoppers may not notice the difference

The owner of iconic cereals Corn Flakes and Nutri-Grain, formerly known as the Kellogg Company, has split into two and rebranded as Kellanova and WK Kellogg Co — but Australian consumers are unlikely to notice the change.

Key points:
Kellanova unveiled a plan last year to split itself into companies focused on snacks, North American cereals, and its plant-based meat
Australian products will retain the recognisable Kellogg logo
Stocks in both companies have fallen on the first day of trade
Kellanova unveiled a plan last year to split itself into separate companies focused on snacks, North American cereals, and its plant-based meat business.

CEO Steve Cahillane said in a statement the name Kellanova signalled the company's ambition to build on the 117-year-old brand.

"The 'Kell' overtly recognises our enduring connection to Kellogg Company, while 'anova,' which combines 'a' and the Latin word 'nova,' meaning 'new,' signals our ambition to continuously evolve as an innovative, next-generation, global snacking powerhouse," he said.

However, despite the name change, the Australian products will retain the recognisable Kellogg logo.

The name WK Kellogg Co is a nod to the company's founder, Will Keith Kellogg.

"While the company's corporate name has changed to Kellanova, the Kellogg's brand will remain on its products around the world and in Australia," managing director of Kellanova ANZ Anthony Holme said.

"Consumers will still be able to buy the brands they know and love, with no change to the distinctive and globally recognised 'Kellogg's' brand name.

"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 a new ambition".

"We are starting from a position of strength that is rooted in a century-old legacy as we embark on a journey to achieve our vision of becoming the world's best-performing snacks-led powerhouse."

Stock prices dip under new brands
The name change, however, has not fared well on the stock market.

Shares of Kellanova fell more than 7 per cent on Monday after the packaged food giant completed the spin-off 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 September 21, a statement said.

Kellanova shares fell to as low as $US51.83 ($82.41), down 7.2 per cent, after opening at $US55.70, while WK Kellogg Co dropped by more than 11 per cent and was last at $US13.79.

Both companies are listed on the New York Stock Exchange and are trading for the first time under their new corporate names.

"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 chief investment officer at Running Point Capital Advisors Michael Ashley Schulman, in California.

Kellanova expects to generate up to $US13.6 billion in annual sales from its snack brands, including Pringles, Cheez-It and 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, are expected to generate annual sales of about $US2.7 billion.

Multiple analysts, including from Jefferies and Piper Sandler, cut their price target for Kellanova's stock citing its dour sales outlook and low-margin business. The median price target for the 18 analysts covering Kellanova's stock is $US68.50 and their average recommendation is "hold", according to LSEG data.

"We expect to see near-term volatility in the shares of both companies," said CFRA Res

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