Newell Brands on Friday expanded a divestiture plan, which will eliminate a third of its sales, and the consumer products maker said it is selling its Waddington Group packaging unit for $2.3 billion in a bid to be a nimbler company.
The company’s shares rose 3 percent to $27.50 in premarket trading.
The Waddington sale is the first major divestiture by the company since it laid down plans to explore options for several of its businesses in January.
Proceeds from Waddington, which makes disposable cutlery and drinkware, is a part of the roughly $10 billion in divestitures that Newell has outlined.
“Investors never wanted Newell to own Waddington and likely underestimated the multiple a sale could bring,” Renaissance Macro Securities analyst April Scee said.
Newell on Friday said it was adding Jostens and Pure Fishing to the list of brands it plans to sell under an “accelerated transformation plan”, that will ultimately reduce Newell’s net sales by 35 percent, through the sale of 45 percent of its portfolio and a 39 percent cut in total employees.
“Simplification will enable speed and agility to take costs out,” Chief Executive Officer Michael Polk said as the company looks to become nimbler when retailers are paring back inventories as fewer shoppers visit stores.
Under the Hoboken, New Jersey-based company’s plan laid out in January, Newell would focus on nine core businesses, but the new plan narrows its focus to seven.
Newell said its divestiture process was “well underway” and expects to complete all transactions by the end of 2019 and become a company with net sales of about $9.5 billion in 2020.
The new plan comes just a few weeks after Newell ended a months-long proxy fight with hedge fund Starboard Value, by agreeing to add three new directors to its board.
Billionaire investor and Newell shareholder Carl Icahn has also played a part in ending the proxy fight, by giving up two of the four board seats he was awarded by Newell in March, to pave the way for adding new independent directors.
Newell also reported first-quarter sales that fell nearly 8 percent and missed analysts’ estimates, mainly due to divestitures in 2017 and the bankruptcy and subsequent liquidation of Babies ‘R’ Us.
The company said its normalized earnings per share was 34 cents, beating the average analysts’ estimate of 26 cents, according to Thomson Reuters I/B/E/S.