Ontex's Strategic Shift: Selling Brazilian Operation to Softys
Ontex Group NV Takes a Strategic Step Forward
Ontex Group NV, a leading international developer and producer of personal care products, has recently made headlines by entering into a binding agreement to sell its Brazilian operations to Softys S.A. This transaction, valued at an impressive BRL 671 million, equates to roughly €110 million, setting a new course for Ontex as it strategically reshapes its portfolio.
The Motivation Behind the Sale
A Transformative Move for Ontex
Gustavo Calvo Paz, the CEO of Ontex, expressed his enthusiasm regarding this significant divestment, noting that it marks a pivotal moment in Ontex’s journey toward refining its operational focus. The company aims to prioritize retail brands and healthcare sectors, particularly in the European and North American markets. This strategic decision not only enhances their business model but also significantly reduces their debt, solidifying their position for upcoming transformations.
Partnership with Softys
Softys, a prominent player in the personal hygiene industry throughout Latin America, is well-positioned to oversee Ontex's Brazilian operations following the acquisition. Having successfully integrated Ontex's Mexican business into its portfolio the previous year, Softys is poised to leverage its experience to drive growth. With 40 years of expertise in the hygiene market, Softys will benefit from the talented workforce already established at Ontex, which is expected to sustain operational continuity.
Details of the Transaction
The agreement encompasses Ontex’s entire Brazilian business, including its manufacturing facility located in Senador Canedo, Goiás. Known for producing a diverse range of products, Ontex's Brazilian branch develops and distributes diapers and other baby care items under respected brands such as PomPom, Cremer, and Turma da Mônica, along with adult care products marketed under the Bigfral name.
Financial Insights
In terms of financial performance, this division made substantial contributions, generating revenue of €97 million and reporting an adjusted EBITDA of €13 million during the first half of 2024. From the transaction proceeds, which are subject to traditional financial adjustments, Ontex expects to net around €82 million after accounting for transaction costs and taxes. Notably, they anticipate a one-time gain of approximately €39 million, alongside recognizing a non-cash accounting loss stemming from currency translation adjustments.
Timeline and Future Outlook
Both Ontex and Softys are targeting the closure of this transaction in the first half of 2025, contingent upon customary regulatory approvals, including clearance from the Brazilian antitrust authority. This step is crucial for ensuring that the transition occurs smoothly and complies with legal frameworks.
Community and Employee Impact
With around 1,400 employees impacted by this transition, Ontex acknowledges the importance of supporting their workforce throughout the change. The emphasis on fostering a collaborative relationship with Softys aims to ensure that employees find new opportunities within an established and growing company.
About Ontex Group NV
Ontex Group NV stands as a notable leader in the global market for personal care products, providing innovative solutions across baby care, feminine care, and adult care segments. Operating in nearly 100 countries, Ontex has a workforce of around 7,500 people, with headquarters situated in Aalst, Belgium. Being listed on Euronext Brussels under the ticker symbol Brussels:ONTEX, the company is committed to maintaining transparency and open communication with stakeholders.
Frequently Asked Questions
What is the main reason for Ontex selling its Brazilian business?
The divestment aligns with Ontex’s strategy to focus on retail brands and healthcare sectors predominantly in Europe and North America while reducing debt.
Who is Softys and what is their relationship with Ontex?
Softys S.A. is a personal hygiene company that has recently acquired Ontex’s Brazilian operations. They have previous experience working with Ontex’s Mexican branch, enhancing their confidence in managing the Brazilian business.
How will this sale impact the employees involved?
Ontex is committed to supporting its employees throughout this transition, ensuring they have opportunities within Softys and a smooth adjustment to the new corporate landscape.
When is the expected closure of the transaction?
The transaction is targeted for closure in the first half of 2025, pending necessary regulatory approvals.
What financial impact does Ontex expect from this sale?
Ontex anticipates net proceeds of approximately €82 million from the transaction along with a one-time gain of about €39 million, while acknowledging a non-cash accounting loss due to currency translation reserves.
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