Why Kimberly Clark (KMB) Is Buying Softex Indonesia For $1.2 Billion

By Amit Chowdhry ● September 4, 2020
  • Kimberly Clark Corp (NYSE: KMB) recently announced it is buying Softex Indonesia for $1.2 billion in cash from a group of shareholders including CVC Capital Partners Asia Pacific IV

Kimberly Clark Corp (NYSE: KMB) recently announced it is buying Softex Indonesia for $1.2 billion in cash from a group of shareholders including CVC Capital Partners Asia Pacific IV. This deal will enable Kimberly Clark to pursue opportunities for the sizeable market for diapers and feminine hygiene products in Indonesia.

Softex Indonesia is known as the second-largest diaper company in Indonesia — which generates around 80% of sales from the category. Softex Indonesia generated net revenue of $420 million last year.

The diaper market in Indonesia is estimated to be at $1.6 billion, the sixth largest in the world with approximately 5 million annual births. And about 80% of Softex Indonesia sales come from diapers. Plus it currently holds the number two market share position with the Sweety and Happy Nappy brands while continuing to grow its market presence.

In terms of feminine care, the company holds the number 3 market share position with the Softex brand. And in adult care, it holds the number 2 market share position with the Confidence brand.

The deal is another demonstration of Kimberly-Clark’s commitment to generate improved and sustainable top-line growth and create long-term shareholder value. Excluding one-time transaction and integration costs, the acquisition’s impact on adjusted earnings per share in 2020 and 2021 is expected to be immaterial. The deal will be financed primarily through incremental debt and secondarily cash on hand.

And the deal is expected to close early in the fourth quarter of 2020 and is subject to customary closing conditions. Morgan Stanley & Co. LLC and Centerview Partners LLC acted as financial advisors, and Gibson Dunn and Crutcher LLP acted as legal counsel to Kimberly-Clark on the transaction.

KEY QUOTES:

“This acquisition represents a compelling strategic fit and demonstrates our commitment to accelerate growth in developing and emerging markets. Moreover, adding Softex Indonesia and its brands to Kimberly-Clark will enhance our company’s underlying growth prospects and help us create even more long-term shareholder value.”

— Mike Hsu, Chairman and CEO, Kimberly-Clark

“Softex Indonesia has a strong, growing and profitable business with a portfolio of brands loved by Indonesian consumers. This acquisition provides an opportunity for Kimberly-Clark to accelerate our growth in Southeast Asia, and we look forward to combining our strengths in innovation and brand building to expand on Softex Indonesia’s continued success.”

— Aaron Powell, President of Kimberly-Clark’s Asia-Pacific consumer business