We're kicking off our day right, with a  Bullpen addition of "Special K".
Tuesday we heard from Kellogg ( K) that it plans to split the company into three separate parts: global snacks, cereals and "plant-based" foods. It's an interesting time for Kellogg to do this, but apparently management believes the company is worth more in pieces.
We have seen these sort of spinoffs before and they are largely successful, unlocking value for shareholders that appears to be hidden. Take Raytheon Technologies ( RTX) , for example, which resulted resulted from a merger with United Technologies. As part of that merger, they agreed to spin off Carrier Global ( CARR) and Otis Worldwide ( OTIS) , a tax free exchange for shareholders. Those same shareholders received shares of all three companies. The same thing would happen for Kellogg in a year or so, in our view.
But does it really create value? The king of this kind of action is Altria ( MO) , which unlocked over $200 billion of shareholder value.
While there are skeptics about this strategy history seems to prove out over time. We'll keep a close eye on this deal and place Kellogg in the Bullpen for now. The company's brands are strong, and the cereal company will compete with Post and some other unique brands.
We like the opportunity here to own three companies for the price of one. While it is too early to put K in the portfolio, we'll be ready to add this name at the right moment.

Action Alerts PLUS had no positions in any securities mentioned.