Ralston Purina plans to spin off Eveready battery unit

Company moves to focus on pet-food business

Consolidation

June 11, 1999|By BLOOMBERG NEWS

ST. LOUIS -- Ralston Purina Co. plans to spin off its struggling Eveready battery unit to focus on its pet-food business, the largest in the United States.

The battery business is No. 2 worldwide with its Eveready and Energizer brands, though sales fell last year because of U.S. competition and slumping Asian economies. Ralston's pet products include Meow Mix and Cat Chow foods and Tidy Cats litter.

The move caps Chairman William Stiritz's 18-year drive to winnow Ralston's holdings, which once ranged from the bakeries that made Wonder Bread and Twinkies to the Jack-in-the-Box hamburger joints to the St. Louis Blues hockey team. The remaining pet division, which generates 70 percent of profit, is growing and profitable, analysts said.

"Stiritz created a lot of value by breaking off and selling pieces of the business," said analyst Nomi Ghez at Goldman Sachs & Co. "The problem is that over the past couple of years, the remaining batteries unit has disappointed."

Ralston rose $1.8125 yesterday to close at $29.50. The stock, not including the value of spun-off companies, has risen about 15-fold under Stiritz, topping the 10-fold rise in the Standard & Poor's 500 index.

The St. Louis-based company said it expects to spin off the battery unit in seven to 10 months.

Ralston had $4.65 billion in revenue last fiscal year. The pet-food business had sales of $2.58 billion last year, while batteries accounted for $2.07 billion.

Investors have expected the split, pointing to Stiritz's history and the 1997 decision to make J. Patrick Mulcahy and Patrick McGinnis co-chief executives and presidents. Mulcahy said yesterday that he's resigning those posts to prepare for the spinoff at Eveready Battery Co., where he will be chairman and CEO. McGinnis will be Ralston president and CEO.

"The company was certainly organized in such a way as to split up the two business very easily," said analyst Robert Cummins at Schroder & Co.

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