Consumer products major Kimberly-Clark (NYSE:KMB) is offloading its personal protective equipment (PPE) business to Australia’s Ansell (AU:ANN), in a deal worth $640 million. The deal follows KMB’s recent announcement of a major business reorganization. Additionally, KMB’s first-quarter numbers are coming up on April 23.
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KMB’s PPE unit produces and sells products such as gloves and eyewear under the Kimtech and KleenGuard brands. These products mainly cater to the scientific and industrial markets.
M&A Rationale
Importantly, the decision to offload the PPE business to Australia’s Ansell is a strategic response to a post-pandemic market trend, with buyers now reverting their focus back to sourcing from foreign entities. During the COVID-19 era, there was a notable surge in domestic capacity for personal protective equipment. However, the reopening of global supply chain networks has led to decreased demand, causing facilities to operate at reduced capacity.
Long-Term Vision
For KMB, the transaction follows its recent ambitious new operating model and growth plans. The maker of Kleenex and Huggies is aiming to contain costs and streamline its operations.
With the aim for long-term growth, the company intends to expand its portfolio by developing 12 leading brands in their respective categories. It also seeks to elevate 80% of its net sales from five key categories within a $240 billion addressable market. In addition, KMB is restructuring its operations into three distinct business segments: North America, International Personal Care (IPC), and International Family Care and Professional (IFP).
KMB’s Upcoming Q1
Separately, KMB is slated to announce its first-quarter results on April 23. Analysts expect the company to generate an EPS of $1.62 on revenue of $5.08 billion for the quarter. In the comparable year-ago period, KMB’s EPS of $1.67 had comfortably outpaced expectations by $0.35.
What Is the Price Target for KMB?
KMB’s stock price has inched up by nearly 8.4% over the past six months. Overall, the Street has a Hold consensus rating on Kimberly-Clark, alongside an average KMB price target of $131.23.
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