P&G eyes Duracell, Braun in sweeping brand culling -sources

Avante

18/08/2014 14:52

By Olivia Oran and Soyoung Kim 
    NEW YORK, Aug 18 (Reuters) - Procter & Gamble Co  PG.N  is 
working with advisors including Goldman Sachs Group  GS.N  as 
the world's largest household products maker reviews up to 100 
underperforming brands for potential divestiture, people 
familiar with the matter said. 
    While P&G has yet to determine which brands it will seek to 
shed, Duracell batteries and Braun shavers are the two largest 
assets likely to be divested, the people said, asking not to be 
named because the matter is not public. 
    The company, which also makes Gillette razors and Tide 
detergent, said this month it would consider selling more than 
half its brands whose sales have been declining for the past 
three years, a drastic attempt to revive growth and save costs. 
 ID:nL4N0Q745T  
    These brands up for review are estimated to have roughly 
$900 million in earnings before interest, tax, depreciation and 
amortization (EBITDA) combined, the people said. 
    Duracell, the world's No.1 battery business, alone accounts 
for the majority of the value with estimated EBITDA of around 
$500 million, according to one person. Braun is the next largest 
brand likely to be shed, with less than $100 million in EBITDA, 
that person added. 
    Several private equity firms have already started exploring 
potential deals involving various P&G brands, according to the 
people familiar with the matter. 
    Representatives for P&G could not be immediately reached for 
comment. Goldman Sachs declined to comment.  
    P&G did not name any of the brands it planned to sell but 
Chief Executive A.G. Lafley said the company would narrow its 
focus to 70 to 80 of its biggest brands, which include Pampers 
diapers and Tide detergent. 
    These top brands generate 90 percent of its $83 billion in 
annual sales and over 95 percent of its profit. 
    The sweeping move is a major strategy shift for the consumer 
products giant, whose revenue growth has been sluggish, with 
sales missing Wall Street's estimates in nine of the last 13 
quarters. 
    It also reflects a wider trend among conglomerates across 
various industry sectors to streamline their business lines, by 
shedding non-core operations and allocating resources to high 
growth areas. 
    Large consumer companies like Nestle SA  NESN.VX  and 
Unilever Plc  UNc.AS  have shed underperforming businesses in 
the last year to focus on their top brands.  
    Healthcare giants including Merck & Co  MRK.N , Abbott 
Laboratories  ABT.N  and GlaxoSmithKline Plc  GSK.L  have also 
moved to shed their declining mature drug businesses in recent 
months.  
    P&G says it has been hurt by "choppy" growth in developed 
markets, tough competition and a strengthening U.S. dollar. The 
company has sought to cut expenses by streamlining management, 
reducing costs and cutting jobs under a five-year, $10 billion 
restructuring plan announced in 2012. 
 
 (Additional reporting by Greg Roumeliotis; Editing by Chizu 
Nomiyama) 
 
Keywords: P&G DIVESTITURE