K-C considers health care spin-off

Kimberly-Clark is considering spining-off its health care business to create a stand-alone, publicly traded health care company with approximately $1.6 billion in annual net sales and leading market positions in both surgical and infection prevention products and medical devices.

“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,” said chairman and CEO Thomas J. Falk. “This move would allow K-C Health Care to optimise 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.”

Robert E. Abernathy, currently Kimberly-Clark Europe group president will become chief executive officer of the new health care company if the spin-off ultimately occurs.

Company management will continue to analyze a potential spin-off and expect to make a final recommendation to the board of directors in the next few 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.

K-C Health Care has the number one or number two market position in several product categories in the United States, including sterilization wrap, face masks, surgical drapes and gowns, closed suction catheters, pain pumps and enteral feeding tubes. Its net sales in 2012 were $1.6 billion, with about 70% in North America and most of the rest in Europe and Asia. Total net sales are split approximately 70% surgical and infection prevention products and 30 percent medical devices. The business had more than 16,000 employees at the end of 2012, with a large majority located in low-cost manufacturing operations in Latin America and Asia. Business unit headquarters are in Roswell, Georgia.