The Procter & Gamble Company (PG) recently announced the sale of its Camay and Zest soap brands to U.K.-based consumer goods giant Unilever, plc (UL) for an undisclosed amount to focus better on fewer core strategic brands.
Along with the brands, the consumer giant will sell its Talisman manufacturing facility in Mexico. Once the transaction is over, 170 employees associated with the unit will be transferred to Unilever.
The transaction involves the global sale of the Camay brand and the sale of the Zest brand outside of North America and the Caribbean. The sale is expected to close in the first half of 2015.
The divesture is in line with P&G’s plans to divest around 100 underperforming brands to concentrate better on fewer core strategic brands which have greater potential for growth and thereby improve the top line.
In August, the Zacks Rank #3 (Hold) company announced aggressive plans to streamline its business to focus more on 70 to 80 of its biggest brands including the Billion Dollar Brands like Tide, Pampers and Oral-B. Back then, the Cincinnati-based company mentioned that over the next two years, it plans to harvest, partner, divest or discontinue 90 to 100 brands whose sales and profits have been declining over the past three years.
In keeping with the plan, P&G sold its American and Asian pet care business to Mars, Inc. in July and in September entered into an agreement to sell its European pet care business to Spectrum Brands Holdings, Inc. (SPB). Moreover, the company has signed a deal to divest its Duracell batteries business to Berkshire Hathaway, Inc. (BRK.B) in exchange for Berkshire’s equity stake in P&G. Both the Spectrum Brands and Duracell deals are expected to close in fiscal 2015.
Over the last five quarters, P&G has divested, discontinued or made plans to consolidate 28 brands. The company estimates that including the Duracell transaction, it would be approximately 25% through the portfolio rationalization plan.
We believe that a smaller and more focused company would be able to grow faster, create more value and be much easier to manage.
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