P&G to Exit Duracell Business
The Procter & Gamble Company (P&G) reported first quarter fiscal year 2015 core earnings per share of $1.07, an increase of two percent versus the prior year. But overshadowing this modest growth was the company’s announced intention to exit the Duracell personal power business by creating a stand-alone Duracell company. P&G said its goals in the process of exiting this business are to maximize value to P&G’s shareholders and minimize earnings per share dilution.
During the first quarter, the company also completed plans to exit the Pet Care business. P&G closed the divestiture of its pet business in the Americas to Mars, Inc. in July. Mars then exercised their option to purchase P&G’s pet business in Asia. In September, P&G signed an agreement to divest its European pet business to Spectrum Brands. All remaining elements of these transactions are expected to close in calendar year 2015, pending regulatory approvals.
“We continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio by focusing on our biggest opportunities," says P&G CEO A.G. Lafley. "The pet care divestiture and exit of the battery business will allow us to further focus these efforts.”
Moving forward, P&G will exit the battery business in two steps. The first step was finalizing an agreement to sell its interest in a China-based battery joint venture, which it accomplished in late August. Terms of this transaction were not disclosed. The second step is the exit of the Duracell business. Although no decision has been made on the form of the exit, P&G’s current preference is a split-off of the Duracell business into a stand-alone company.
In a split-off, P&G shareholders would be given the option of exchanging some, none, or all of their P&G shares for shares in the newly formed Duracell company. P&G’s outstanding share count would be reduced by the number of P&G shares exchanged. The exact exchange ratio would be set just prior to the completion of the transaction, which P&G expects would occur in the second half of calendar year 2015.
P&G said it would notify its shareholders when a final decision is made regarding the form of the business separation. The company added that any alternative exit scenario — including a spin-off, divestiture or other offer — that generates equal or better value will be considered.
“We greatly appreciate the contributions of our Duracell employees. Since we acquired the business in 2005 as part of Gillette, Duracell has strengthened its position as the global market leader in the battery category,” said Lafley. “It’s a business with attractive operating profit margins and a history of strong cash generation. I’m confident the business and its employees will continue to thrive as its own company.”
The company said it will continue to report results of the Duracell business as continuing operations for the time being.
During the first quarter, the company also completed plans to exit the Pet Care business. P&G closed the divestiture of its pet business in the Americas to Mars, Inc. in July. Mars then exercised their option to purchase P&G’s pet business in Asia. In September, P&G signed an agreement to divest its European pet business to Spectrum Brands. All remaining elements of these transactions are expected to close in calendar year 2015, pending regulatory approvals.
“We continue to accelerate and increase productivity savings, sharpen our strategies and strengthen our portfolio by focusing on our biggest opportunities," says P&G CEO A.G. Lafley. "The pet care divestiture and exit of the battery business will allow us to further focus these efforts.”
Moving forward, P&G will exit the battery business in two steps. The first step was finalizing an agreement to sell its interest in a China-based battery joint venture, which it accomplished in late August. Terms of this transaction were not disclosed. The second step is the exit of the Duracell business. Although no decision has been made on the form of the exit, P&G’s current preference is a split-off of the Duracell business into a stand-alone company.
In a split-off, P&G shareholders would be given the option of exchanging some, none, or all of their P&G shares for shares in the newly formed Duracell company. P&G’s outstanding share count would be reduced by the number of P&G shares exchanged. The exact exchange ratio would be set just prior to the completion of the transaction, which P&G expects would occur in the second half of calendar year 2015.
P&G said it would notify its shareholders when a final decision is made regarding the form of the business separation. The company added that any alternative exit scenario — including a spin-off, divestiture or other offer — that generates equal or better value will be considered.
“We greatly appreciate the contributions of our Duracell employees. Since we acquired the business in 2005 as part of Gillette, Duracell has strengthened its position as the global market leader in the battery category,” said Lafley. “It’s a business with attractive operating profit margins and a history of strong cash generation. I’m confident the business and its employees will continue to thrive as its own company.”
The company said it will continue to report results of the Duracell business as continuing operations for the time being.