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Kimberly-Clark Corporation announces that its board of directors has authorized management to pursue a potential tax-free spin-off of the companys healthcare business. A spin-off would create a stand-alone, publicly traded healthcare company with approximately $1.6 billion in annual net sales and leading market positions in both surgical and infection prevention products and medical devices.
Chairman and CEO Thomas J. Falk notes, While K-C Health Care has been part of our company since the 1970s, its strategic fit and growth priorities have changed over time and we now think that pursuing a spin-off makes sense for our shareholders. This move would allow K-C Health Care to optimize its performance and flexibility to pursue its own value-creation opportunities. A spin-off would also allow us to further sharpen our focus on our consumer and K-C Professional brands. This announcement is further evidence of our focus on creating shareholder value and how we use portfolio management to run our company.
Robert E. Abernathy, currently Kimberly-Clark group president for Europe, Global Nonwovens, and Continuous Improvement and Sustainability, will become chief executive officer of the new healthcare company if the spin-off ultimately occurs. Abernathy joined Kimberly-Clark in 1982 and has held senior management positions throughout the company, including having overall responsibility for K-C Health Care from 1997 to early 2004. Joanne B. Bauer will continue as Kimberly-Clark president of Global Health Care, work closely with Robert Abernathy on separation planning and retire when the spin-off is completed.
Robert is a seasoned executive with a long track record of success and Im confident he will be a terrific leader of the new company, says Falk. He is excited about working with the many talented individuals on the healthcare team to create shareholder value as a stand-alone company.
Company management will continue to analyze a potential spin-off and expects to make a final recommendation to the board of directors in the next several months. If the board approves a spin-off, a transaction would likely be completed by the end of the third quarter of 2014, subject to market, regulatory and other conditions. The company expects that the spin-off would be in the form of a tax-free distribution of 100 percent of the new companys common stock to Kimberly-Clark shareholders. Morgan Stanley has been retained to assist Kimberly-Clark in the pursuit of the spin-off.