Procter & Gamble Co (NYSE:PG) is working with advisors including Goldman Sachs Group (NYSE:GS) as the world's largest household products maker reviews up to 100 underperforming brands for potential divestiture, people familiar with the matter said.
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While P&G has yet to determine which brands it will seek to shed, Duracell batteries and Braun shavers are the two largest assets likely to be divested, the people said, asking not to be named because the matter is not public.
The company, which also makes Gillette razors and Tide detergent, said this month it would consider selling more than half its brands whose sales have been declining for the past three years, a drastic attempt to revive growth and save costs.
These brands up for review are estimated to have roughly $900 million in earnings before interest, tax, depreciation and amortization (EBITDA) combined, the people said.
Duracell, the world's No.1 battery business, alone accounts for the majority of the value with estimated EBITDA of around $500 million, according to one person. Braun is the next largest brand likely to be shed, with less than $100 million in EBITDA, that person added.
Several private equity firms have already started exploring potential deals involving various P&G brands, according to the people familiar with the matter.
Representatives for P&G could not be immediately reached for comment. Goldman Sachs declined to comment.
P&G did not name any of the brands it planned to sell but Chief Executive A.G. Lafley said the company would narrow its focus to 70 to 80 of its biggest brands, which include Pampers diapers and Tide detergent.
These top brands generate 90 percent of its $83 billion in annual sales and over 95 percent of its profit.
The sweeping move is a major strategy shift for the consumer products giant, whose revenue growth has been sluggish, with sales missing Wall Street's estimates in nine of the last 13 quarters.
It also reflects a wider trend among conglomerates across various industry sectors to streamline their business lines, by shedding non-core operations and allocating resources to high growth areas.
Large consumer companies like Nestle SA
Healthcare giants including Merck & Co
P&G says it has been hurt by "choppy" growth in developed markets, tough competition and a strengthening U.S. dollar. The company has sought to cut expenses by streamlining management, reducing costs and cutting jobs under a five-year, $10 billion restructuring plan announced in 2012.
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