Newell Brands consolidates business units, creates global e-commerce unit
Newell Brands announced a series of changes related to a comprehensive strategic review of its business conducted since the completion of the Newell Rubbermaid and Jarden combination. Newell Brands will transform from a holding company to an operating company and, with a new set of investment priorities and a sharpened set of portfolio choices, accelerate growth and performance by deploying a proven set of growth capabilities over a broader set of categories and by disproportionately resourcing the business with the greatest potential. The company will simplify its operating structures consolidating the existing 32 Business Units to 16 Operating Divisions, including the creation of a new global enterprise-wide e-Commerce Division. The company will also focus and strengthen its portfolio by holding a number of businesses for sale, using the proceeds primarily to accelerate debt pay down, and creating a platform for future acquisitions that strengthen and scale the company's core businesses. The businesses held for sale represent about 10 percent of the portfolio and include the vast majority of the Tools Segment, the Winter Sports businesses within the Outdoor Solutions Segment, the Heaters, Humidifiers, and Fans businesses within the Consumer Solutions Segment, and the Consumer Storage Container business within the Home Solutions Segment. The total 2015 net sales of the businesses held for sale are approximately $1.5 billion, and include about $100 million of the $250 to $300 million of previously announced exits or assets held for sale. The sale processes are underway and the company hopes to complete the divestiture of the assets held for sale within the first half of 2017. Proceeds from successful divestitures will be used primarily to accelerate the pay down of debt, with the goal of achieving the company's stated objective of a leverage ratio of 3 to 3.5 times EBITDA. At a recent investor conference, the company announced that it expects to deliver $500 million in costs synergies by the end of 2018, an acceleration of cost synergy delivery relative to the original commitment of 3 to 4 years from the completion of the Newell Rubbermaid and Jarden Corporation combination on April 15, 2016. The acceleration of cost synergy delivery is connected in part to the announcement today of the consolidation of 32 Business Units to 16 Divisions. The actions announced today will not impact 2016 core sales or normalized EPS guidance. More details will be shared on the company's third quarter earnings call on October 28, 2016.