Prime Highlights:
- Kimberly-Clark is close to agreeing to sell its global tissue unit to Brazil’s Suzano for about $3.5 billion.
- The transaction is part of a general strategy to condense the business and concentrate on higher-margin categories.
Key Facts:
- The business being sold has annual net sales of less than $3.5 billion and is the company’s lowest profitability.
- Kimberly-Clark keeps its $11 billion North American and $5.7 billion global personal-care companies.
- The action comes after a 2023 divestment of a protective apparel unit for $640 million.
Key Background :
Kimberly-Clark, the US consumer goods giant behind home brands like Kleenex and Huggies, is set to offload its global tissue business to Brazilian pulp and paper behemoth Suzano SA in a deal worth around $3.5 billion, according to reports. The move signals a major strategic realignment for the company as it looks to stream its operations and focus on better-performing business segments.
The portion of the business on offer is the company’s International Family Care and Professional segment. It is Kimberly-Clark’s smallest of its three main businesses and has been least profitable. With this segment sale, the company will have more scope to concentrate on its higher-margin North American consumer goods and international personal-care segments. Alone, its North American business raked in $11 billion in 2024, and international personal-care operations generated $5.7 billion in sales.
This deal comes on the heels of the company’s 2023 divestiture of its protective wear business to Australian firm Ansell for $640 million. Kimberly-Clark is also set to make a $2 billion investment expanding its U.S. factory capacity over the next five years—again stressing its desire to build up domestic operations.
For Suzano, the deal would be a strategic way to increase its international presence in tissue products. It comes on the heels of Suzano’s earlier acquisition of Kimberly-Clark’s tissue assets in Brazil in 2023 and marks the company’s expanding ambitions beyond its pulp-making roots into consumer staples.
The transaction comes as Kimberly-Clark also faces macroeconomic headwinds. Increased raw material prices and U.S. trade tariffs have affected margins, which led the company to adjust its earnings estimates. To respond, Kimberly-Clark reorganized into three divisions in early 2024, with a view of enhancing agility and investor faith. The company’s share performance has been flat, but this sale is supposed to enhance its profitability prospects and positioning in the market. Another company that has made significant changes recently is Bristol Myers Squibb.
In total, the almost agreed-upon transaction is in sync with Kimberly-Clark’s refocused efforts toward core growth drivers and enables Suzano to expand its tissue business internationally.
