NEW YORK (The Deal) -- Energizer Holdings (ENR - Get Report) said Wednesday it would split its personal care brands off from its battery and household item operations, betting that both businesses would benefit from a more streamlined focus.
Though St. Louis-based Energizer is perhaps best known as a battery maker, the company's personal care brands have surpassed its household products in terms of revenue. The split, which is expected to be completed in mid-2015, would send the $2.6 billion-sales personal care unit out on its own separate from its $1.9 billion-revenue household business.
Post-deal, the personal care business would have such brands as Schick razors, Edge shaving gel, Banana Boat sun screen and feminine care brands like Playtex, Carefree and o.b., while Energizer would be focused on its batteries and portable lighting products.
Energizer said that the split is the culmination of a transformation that has included dealmaking and cost cutting. CEO Ward M. Klein called the separation "the next logical step to unlock even greater value for Energizer shareholders," pledging that during the separation "the company's working capital and cost reduction efforts will continue without interruption, and we expect to achieve the full savings projected."Investors reacted enthusiastically to the news, sending shares up more than $16, to above $114 at open Wednesday. Post-deal, Klein will serve as executive chairman of the board of the personal care business, with personal care unit head David Hatfield expected to be CEO of that company. Current Energizer chairman J. Patrick Mulcahy would remain chairman of the household products company, with unit head Alan Hoskins serving as CEO. Energizer, which traces its roots back to the 1896 founding of the American Electrical Novelty & Manufacturing Co., has spent its recent years in nearly constant flux. The company was spun out of Ralston Purina Co. -- now part of Nestle SA-in 2000, and took a big step toward diversification in 2007 when it bought Playtex Products Inc. for $1.9 billion. Goldman, Sachs & Co. is providing financial advice on the split, with Wachtell, Lipton, Rosen & Katz and Bryan Cave LLP acting as legal counsel on the planned deal.