Key takeaways:
- Kellogg’s 2023 split created two cleaner, standalone businesses that were ultimately easier to value and easier to sell.
- Kellanova’s global scale and cash generation made it a natural fit for Mars, while WK Kellogg’s focused cereal platform appealed to Ferrero’s longer-term portfolio strategy.
- The breakup delivered focus, but its most tangible outcome was liquidity, turning structural separation into strategic optionality.
When Kellogg separated into two publicly listed businesses in October 2023, it framed the move as strategic clarity. One company – Kellanova – would chase global snacking growth across salty and sweet categories in more than 180 markets. The other – WK Kellogg Co – would double down on North American cereal, sharpen operational focus and unlock value long obscured inside a broader conglomerate.
Investors were told the split would create clarity, improve capital allocation and allow each business to tailor its strategy to its category realities. A classic ‘unlock value’ play: simplify the portfolio, reduce complexity, let each business be judged on its own merits.
What happened next was faster than many expected. Kellanova agreed to be acquired by Mars, Incorporated in a deal valued at roughly $36bn including debt, following regulatory scrutiny that was ultimately resolved without remedies in the EU. WK Kellogg Co accepted a $3.1bn offer from Ferrero. By the end of 2025, both were effectively gone from public markets.
Two spin-offs. Two exits. That doesn’t automatically mean the split was designed for sale. But it does raise the question: was independence ever the real destination or was separation simply the fastest route to monetisation?
The market never quite embraced the fairytale
The initial reaction to the split was telling. On their first day of trading as separate entities, shares in both companies fell. Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors, described the situation as a “jigsaw puzzle problem”. Investors were being handed two new stocks and asked to decide which fitted their mandates. Some income-focused funds didn’t want a standalone cereal business. Some global growth funds preferred a broader platform than snacks alone. Separation may have clarified strategy, but it also forced portfolio managers to make sharper calls.
Arun Sundaram, senior equity analyst at CFRA Research, was similarly measured. He noted that investors would need to evaluate “the standalone growth and margin profiles” of each business and suggested volatility was likely as shareholders reassessed their positions.
In short, the split created transparency but it also removed the cushion of diversification. Each company now had to prove its case without internal support.
Kellanova: from focused snacker to acquisition platform
On paper, Kellanova was the jewel. With global brands including Pringles, Cheez-It and Pop-Tarts, alongside international cereal and noodles, it looked like a modern global snacking platform. In its 2024 annual filing, the company reported approximately $1.76bn in net cash from operating activities.
Yet analysts observed that Kellanova traded at a discount to certain packaged food peers. A discounted global snack platform with strong cash flow doesn’t stay overlooked for long.
When the acquisition was announced, Andrew Clarke, global president of Mars Snacking, said the deal would build a “broader, stronger global snacking business”, expanding Mars’ portfolio to multiple billion-dollar brands and increasing investment behind them. Kellanova was already a standalone company with its own reporting structure, leadership team and capital framework. The heavy lifting of separation had already been done.
Clarke also acknowledged there would be “some areas of overlap” to review as the businesses came together. That’s familiar language in transactions of this scale, prompting regulators in Brussels to examine whether combining the portfolios could strengthen negotiating leverage with retailers and, in turn, affect consumer prices. After an indepth investigation, the European Commission cleared the deal in December 2025 without remedies. With that hurdle removed, the strategic rationale moved from theoretical to operational.
Kellanova’s life as an independent listed company was brief. It didn’t spend years refining a public-market identity. It didn’t attempt a transformational acquisition of its own. Instead, it transitioned relatively quickly into private ownership under a group with a different capital structure and time horizon.
WK Kellogg: the operational grind and the premium exit
If Kellanova represented scale, WK Kellogg Co represented focus under pressure.
North American cereal continues to face shifting breakfast habits and intense competition. WK Kellogg responded with a substantial manufacturing reset. In August 2024, it announced plans to close its Omaha plant by the end of 2026, reduce production at its Memphis facility and cut roughly 17% of its workforce – about 550 roles. It estimated one-time charges of $230m-$270m and capital expenditure of $450m-$500m to reconfigure its footprint.
Quarterly disclosures in early 2025 showed price increases of around 3.8% alongside volume declines of roughly 5.6%, with adjusted EBITDA guidance in the $286m-$292m range. Margin defence was front and centre.
Then came the accounting issue. In July 2025, WK Kellogg disclosed in an SEC filing that it had identified an inventory accounting error linked to reporting processes established at the time of the spin-off. Manufacturing expenses had been double counted. The company said the impact was non-cash and didn’t affect operating cash flow, but prior results required restatement.
Shortly afterwards, Ferrero agreed to acquire WK Kellogg at $23 per share.
Giovanni Ferrero, executive chairman of Ferrero Group, said he was “delighted to welcome WK Kellogg” and described the deal as more than an acquisition, highlighting the business’ legacy brands and loyal consumer base. Gary Pilnick, CEO of WK Kellogg, said the transaction would “maximise value for our shareowners and allow WK Kellogg to write the next chapter of our storied legacy.”
Robert Moskow of TD Cowen noted that, after adjusting for net debt, the effective equity value represented a meaningful premium to where the stock had been trading. Schulman characterised the deal as diversification for Ferrero, broadening exposure beyond cocoa-linked confectionery and securing established US shelf presence.
In public markets, WK Kellogg had been a challenged cereal pure-play. In private hands, it became a strategic building block.
The harder question
If the split was about creating two agile, independent growth engines, why did both engines change owners so quickly?
There are plausible answers. Strategic buyers can move faster than public markets. Private ownership can support longer-term investment. Valuation gaps can close through transactions more efficiently than through incremental earnings growth.
But there’s another interpretation. The breakup didn’t just create focus; it created optionality. It turned one complex conglomerate into two discrete, self-contained units with standalone reporting, clearer cost bases and simplified governance. It removed internal capital competition.
There’s no public evidence that either transaction was predetermined at the moment of separation. But the breakup undeniably expanded optionality. Once the architecture was rebuilt, both companies were structurally ready for a transaction: they were simpler to analyse and simpler to acquire.
So the question isn’t whether the split worked. It did. Shareholders ultimately received premiums in both cases. The harder question is whether independence was ever the end point or was the separation always about making two saleable assets out of one complex whole?
Two spin-offs, two sales. A case study in how corporate architecture can shape destiny.
