Kodak sells home-goods unit to British firm for $1.55 billion

September 27, 1994|By Bloomberg Business News

ROCHESTER, N.Y. -- Eastman Kodak Co. agreed yesterday to sell the household goods portion of its L&F Products unit to London-based Reckitt & Colman PLC for $1.55 billion in cash.

The sale almost wraps up Chairman and Chief Executive Officer George Fisher's five-month push to sell businesses not related to Kodak's photography and imaging businesses and to slash debt.

Kodak will get about $7.1 billion for the units it has agreed to sell, ZTC well above the $5.4 billion the company told analysts it expected to fetch. Most of the buyers have been European companies looking for a spot on U.S. shelves.

"They're flushing them out of every corner of the globe," said Nicholas Heymann, an analyst at NatWest Securities Corp. in New York. "What Kodak is probably selling more than brand names is distribution. They are finding foreign buyers that are able to step up and pay the big price."

Shares in the Rochester, N.Y.-based company closed unchanged yesterday, at $52.625, on the New York Stock Exchange.

L&F Products' do-it-yourself division is the only operating business still up for sale, and Kodak expects to have a buyer by the end of the year. The price, according to Wall Street estimates, may be $400 million to $700 million.

The purchase will expand Reckitt's presence in the U.S. market and make it the fourth-largest household products company in the world. Reckitt's products found on U.S. grocery shelves include Easy-Off oven cleaner and Woolite fabric wash.

L&F, which makes Lysol disinfectants, Resolve carpet cleaner and D-Con rat bait, generated about 75 percent of its $800 million worldwide sales last year in the United States. It had $119 million in operating profit last year, Reckitt said.

Kodak's stock price has increased by 30 percent since Mr. Fisher's declaration in May that the 110-year-old company would shed its drug, household goods and medical-testing units.

Most of the rise in the stock is due to the divestitures, said Eugene Glazer, an analyst at Dean Witter Reynolds in New York.

"The progress of the stock price from here will be much more labored," he said, "because I think it will be related to the degree of cost-cutting and the degree of efficiencies in the company. I don't expect Fisher is going to take any bold action to cut the cost structure."

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