The deal means that Kimberly-Clark (K-C) will increase its controlling stake in Kimberly-Clark of South Africa (K-CSA), which currently stands at just over 50 percent, to a 100 percent stake.
The company says that, once completed, the transaction will give it an increased footprint and greater autonomy in South Africa and its associated markets in the region.
Although the financial terms of the transaction were not revealed, the company said that the deal would be subject to the relevant monopoly laws and that the Competition Commission would need to give its approval.
Deal would increase K-C's footprint in the region
If the Commission agrees to the proposed deal, the transaction should be finalized in the second quarter of 2008.
Lion Match, which is a wholly-owned subsidiary of FASIC Investment Corporation, has operated the K-CSA joint venture with K-C since 1955.
K-CSA markets
and
produces personal care products that form part of the groups global portfolio, together with a range of tissue-based products, business-to-business products, as well as marketing the company's health care products.
"Our increased ownership in this successful affiliate bolsters Kimberly-Clark's presence in the country and enhances our growth potential in sub-equatorial Africa ," said Tom Davis, president of K-C Middle East, Eastern Europe and Africa.
Davis also noted that the new company will retain the existing management team for the affiliate, which, combined with the fact that it now has flexibility in how the company evolves in the region, puts it in an even stronger position.
Global sales boosted by personal care
The group recently reported record global quarterly sales, increasing 10.5 percent for the three months ending December 31, taking sales for the quarter to $4.8bn.
The weak dollar, which is aiding US-based manufacturers in international markets, helped push sales up but organic growth was nonetheless strong at 6 percent.
Sales in the personal care division - which accounts for around a third of total sales - drove overall growth, increasing 16.4 percent compared to the same period last year.
Meanwhile, for the full year, sales increased 9.1 percent to $18.3bn while operating profit rose 24.5 percent to $2.6bn.