Kimberly-Clark to spin off health care business

Kimberly-Clark Corporation announced that its board of directors has authorized management to pursue a potential tax-free spin-off of the company's health care business.

A spin-off would 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 1970's, 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,” said CEO   Thomas J. Falk.

“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," he added.

Robert E. Abernathy, president of the company’s European division, has been tagged as the CEO of the new health care company if the spin-off ultimately occurs. 

Joanne B. Bauer will continue as Kimberly-Clark President Global Health Care and work closely with 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 I'm confident he will be a terrific leader of the new company," said Falk. "He is excited about working with the many talented individuals on the health care 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% of the new company's common stock to Kimberly-Clark shareholders. 

K-C Health Care 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% 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. The business unit headquarters are in Roswell, Ga. Kimberly-Clark is a supplier to Wal-Mart Stores Inc. and operates a large sales office in Northwest Arkansas.