After Kellogg announced its plan to split into three separate companies, JPMorgan maintained its underweight stock rating for the company.
Kellogg Co.’s plan to split into three separate companies made plenty of headlines, but JPMorgan analysts say the news isn’t “as seismic a change” as the Kraft Heinz Co. separation from its Mondelez International Inc. snack business back in 2012.
“In essence, therefore, we view the pending Kellogg transactions as a pair of tax-advantaged divestitures, not a blow-up of the total company,” JPMorgan writes. “Whatever Kellogg’s triumvirate of spin-offs gains in operating and financial focus, it loses in reduced scale, dis-synergies, and the cash cost of the break-up,” JPMorgan said.
Credit Suisse analysts note the lack of information that was provided about the way forward for Kellogg’s Global Snacking Co. Analysts also drew comparisons to past food company spin-offs, as well as the possibility for more separations in the future.
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