Kimberly's Scott Paper acquisition to cost 6,000 jobs

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The Independent Online
One day after its shareholders approved its purchase of Scott Paper for $9.4bn (pounds 5.9bn), Kimberly-Clark yesterday announced that it would be eliminating a total of about 6,000 jobs within 12 months as it begins the integration of the two companies.

The chairman of Kimberly-Clark, Wayne Sanders, said that 12 of the company's plants would be closed worldwide and that the company expected to take a $1.4bn restructuring charge in the fourth quarter of this year.

The lay-offs, which represent 10 per cent of the combined workforces of Kimberly-Clark and Scott, are partly prompted by agreements reached with regulators to divest certain brand names and product lines to avoid breaching monopoly requirements. They include Baby Fresh baby wipes.

The company indicated that some of the plants slated for closure would be in Europe. However, it said that these plants would not be identified until final agreement was reached with the European Commission on a proposal to license the production of Kleenex bathroom tissue in the UK and Ireland.

Together, Kimberly-Clark and Scott will be a behemoth in the consumer products sector, coming second in size in the US only to Procter & Gamble, with annual revenue expected to be about $12bn.

Its brand line will include Kleenex, Scott, Huggies, Kotex and Depend.

Of the jobs to be lost, slightly more than half will come from the plants that are to be closed.

On the fate of those plants, Mr Sanders told analysts: "We will make every effort to sell these as operating businesses." Pending the final EC decision, expected next month, Scott and Kleenex will continue to operate as separate companies in Europe, he added.

The Assistant US Attorney General, Anne Bigaman, meanwhile defended the Justice Department's insistence that Kimberly-Clark divest Baby Fresh and the other product lines before being given anti-trust clearance.

"Tissues and baby wipes are used by millions of American familes every day across the country. We can't allow a merger to proceed that could raise prices of these household necessities," she said.

Commenting on the company's plans for restructuring to analysts in New York, Mr Sanders said: "This integration plan will improve our competitiveness by creating economies of scale and leveraging company-wide synergies. In short, this plan is about maximising value for our customers and our shareholders".

Mr Sanders said that he expected the merger of the companies to produce savings of $400m annually by 1997, a year earlier than was originally envisaged.

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