Why General Mills Thinks the Kellogg Spinoff Is Good News for Cereal
Cereal is not a growth business in the consumer staples sector. This is why Kellanova (NYSE: K) decided to spin off WK Kellogg (NYSE: KLG) as its own entity. There are likely to be big implications from this move in the cereal niche, which is exactly what cereal peer General Mills (NYSE: GIS) is hoping to see. Here's why.
The backstory for Kellanova's spinoff of its North American cereal business into Kellogg has a number of nuances. First off, it was something of a good company/bad company spinoff, since Kellanova has been working to boost its growth profile. Cereal in North America is mature and, at best, is a slow-growth niche within the consumer staples space. It was, basically, an overhang on Kellanova's increasingly more growth-oriented business.
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