Newell Brands said on Friday the idea could sell its plastics packaging unit Waddington Group for $2.3 billion, along with added more brands to a divestiture plan aimed at streamlining its operations along with cutting costs.
The sale of Waddington, which makes disposable cutlery along with drinkware, is usually the first major divestiture after activist investors Starboard Value along with Carl Icahn placed their nominees on the company’s board last month.
Newell’s shares were up 6 percent at $28.29 in early trading. The stock took a beating after the company, which sells everything via Sharpie pens to Crock-Pot cookware, first laid out plans in January to explore options for several of its businesses.
As part of its agreement with Icahn, Newell said in March its divestitures could bring in about $10 billion, ratcheting the idea up via its previous estimate of $6 billion.
Newell said on Friday the idea could add Jostens along with Pure Fishing to the list of brands the idea plans to sell, with the expanded divestiture plan ultimately reducing its net sales along with workforce by more than a third.
The moves come as the company’s retailer customers such as Walmart along with Target pare back inventories to cut costs as fewer shoppers visit brick-along with-mortar stores.
“All of these assets should command competitive multiples … the sale of Waddington validates in which belief,” Chief Executive Officer Michael Polk said during a conference call.
Newell said its divestiture process was “well underway” along with expects to complete all transactions by the end of 2019 along with become a company with net sales of about $9.5 billion in 2020.
“Investors never wanted Newell to own Waddington along with likely underestimated the multiple a sale could bring,” Renaissance Macro Securities analyst April Scee said.
The company also reported first-quarter sales in which fell nearly 8 percent along with missed analysts’ estimates, mainly due to divestitures in 2017 along with the liquidation of Toys ‘R’ Us.
however normalized earnings of 34 cents per share beat the average estimate of 26 cents, according to Thomson Reuters I/B/E/S.
“With continued organic weakness along with conflict with Starboard ongoing, there’s enough noise from the stock … However, intended divestitures improve focus or help odds of successful restructuring,” Scee said.
The company also reaffirmed 2018 net sales along with earnings forecast.