Kimberly-Clark nears $3.5 billion sale of global tissue business to Suzano, WSJ reports

Kimberly-Clark is reportedly nearing a deal to sell its Kleenex and tissue businesses outside of North America to Suzano for approximately $3.5 billion; the deal, part of a restructuring initiated last year, could be finalized as soon as Thursday. The unit generates around $500 million in annual EBITDA and was put on the block due to restructuring and as U.S. trade tariffs weigh on Kimberly-Clark's business outlook, leading to a slashed annual profit forecast.

Analysis

Kimberly-Clark (KMB) is reportedly nearing the divestiture of its Kleenex and tissue businesses outside North America to Brazilian pulpmaker Suzano (SUZ) for approximately $3.5 billion, with a potential completion as early as Thursday. This strategic sale forms part of a broader restructuring initiated by KMB last year, significantly influenced by the adverse impact of U.S. trade tariffs on its business outlook, which previously led KMB to slash its annual profit forecast due to increased costs. The international tissue unit in question generates around $500 million in annual EBITDA, implying a transaction multiple of approximately 7x EBITDA; this valuation is slightly below an earlier reported figure of $4 billion when other entities like Royal Golden Eagle and Asia Pulp & Paper Co were also final bidders. For Kimberly-Clark, this divestment aims to streamline its operations and potentially free up capital amidst ongoing economic pressures. For Suzano, this acquisition represents a substantial expansion of its international tissue operations, building upon its 2022 purchase of KMB's tissue paper operations in Brazil.

Key Decisions for Investors

• Investors in Kimberly-Clark should monitor the company's plans for deploying the circa $3.5 billion proceeds, particularly how this aligns with its restructuring goals and efforts to mitigate tariff-related impacts on profitability.
• Suzano investors should assess the strategic fit and integration challenges of these significant international assets, alongside the financial implications for Suzano's leverage and future earnings growth.
• Consider the broader trend of multinational corporations restructuring non-core international assets in response to shifting trade policies and cost pressures, as exemplified by this transaction.