Kimberly-Clark weighs sale of European tissues business: sources

(Reuters) - Kimberly-Clark Corp (KMB.N) is exploring a sale of its European tissue business, as it tries to slash costs and combat slowing sales by exiting less profitable areas, according to people familiar with the matter.

FILE PHOTO - A woman walks outside a Kimberly-Clark building in Maracay, Venezuela July 10, 2016. REUTERS/Carlos Jasso/File Photo

The maker of Kleenex tissues and Huggies diapers has contacted private equity firms to gauge their interest in acquiring the business, which is likely to fetch above 1 billion euros ($1.2 billion), the sources said.

Kimberly-Clark’s European portfolio includes toilet paper brands Andrex in Britain and Ireland, Hakle in Austria and Switzerland and Scottex in Belgium, Italy and Spain.

It was not immediately clear whether any potential divestment would also include the European licenses for brands sold both in Europe and elsewhere, such as Kleenex and Cottonelle, though the standard practice would be to include them, three of the sources said.

The sources cautioned that no deal is certain and asked not to be identified because the matter is confidential. Kimberly-Clark declined to comment.

Kimberly-Clark is one of many packaged goods companies grappling with a fast-changing landscape being rocked by the rise of e-commerce, challenger brands and changing habits.

Earlier this year, the company said it would consider exiting some lower-margin businesses, chiefly in the competitive consumer tissue segment, which is battling higher commodity costs and private label manufacturers.

The Irving, Texas-based company also said it planned to close or sell 10 of its 91 factories worldwide and cut 5,000 jobs - about 13 percent of its workforce - as it strives for more than $2 billion in cost cuts by 2021.

This would not be the company’s first retreat from Europe. In 2012, it quit the diaper business in most of Western and Central Europe to focus on what it saw at the time as faster-growing regions such as China, Brazil and Russia.

In Western Europe, the retail tissue market - which includes tissues, toilet paper, napkins and paper towels - was worth about $14.7 billion last year, according to Euromonitor International. It ranks Kimberly-Clark second, with a 10 percent market share, behind Sweden’s Essity (ESSITYa.ST).

Europe has been tough for Kimberly-Clark, as it vies for shopper loyalty against other multinationals with deeper European focuses such as Procter & Gamble (PG.N) and Unilever (ULVR.L).

Reporting by Harry Brumpton in New York and Martinne Geller in London

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