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Newell to Sell Rexair Business, Transformation Plan On Track

Zacks Equity Research

Newell Brands Inc‘s NWL progress on the Accelerated Transformation Plan is evident from recent divestitures. The company’s transformation plan targets offloading non-core businesses that contribute nearly 35% to total sales. In the latest move, management has agreed to sell the Rexair business to Rhone Capital, a global private equity firm. The transaction, which is anticipated to close by the end of second-quarter 2019, is subject to customary closing conditions and regulatory approvals.

The Rexair business, which manufactures unique Rainbow products to improve indoor environments since 1963, generated roughly $123 million of sales in 2018.

Newell, which is categorized in the Zacks Consumer Products - Staples industry, recently concluded four divestitures that include Pure Fishing and Jostens businesses, The Waddington Group, Rawlings Sporting Goods Company as well as Goody Products. Proceeds from sale of these assets are being utilized to lower balance sheet debt and make share repurchases. In 2018, the company generated more than $5 billion of after-tax proceeds from divestitures.

The company’s Transformation Plan focuses on restructuring into a global consumer product entity, valued at more than $9 billion. The plan is expected to create value and transform the company into a simpler, faster and stronger consumer-focused portfolio of leading brands.

Going forward, management expects to split the Consumer and Commercial Solutions business as well as offload the MAPA and Spontex businesses in a separate transaction. It expects these divestitures to be completed by the end of 2019. The company is divesting non-core brands to reshape its portfolio and improve operational efficiency.

In spite of the optimistic news, shares of this Zacks Rank #4 (Sell) stock have plunged approximately 20% in the past month. The downside was caused by lower-than-expected top-line performance in fourth-quarter 2018. Lower core sales, unfavorable currency and adverse impact from the revenue recognition standard are weighing on Newell’s top line. Moreover, lower sales in all the segments are hurting the top line.

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Newell Brands Inc. (NWL) : Free Stock Analysis Report
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