After already closing plants and cutting costs, Berry Global Group Inc. is now considering selling off a multibillion-dollar part of the company's business.
The Evansville, Ind.-based plastics processor said Sept. 8 the company's Health, Hygiene and Specialties division is now in play as Berry "has initiated a formal process to evaluate strategic alternatives."
That's Wall Street speak to signal big changes could be coming as Berry indicated options include an outright sale, a spinoff to shareholders or another "separation transaction for some or all of the businesses within HH&S."
Berry also raised the possibility of a partnership or joint venture that would include the assets.
"Following an extensive analysis by the board and management team, with support from our incoming CEO Kevin Kwilinski, we have decided to explore strategic alternatives for the HH&S businesses as we continue to seek to enhance value through strategic portfolio management," CEO Tom Salmon said in a statement.
"As always, we will be disciplined throughout this process and will only take actions that we believe are in the best interest of the company and our stakeholders," he said.
Berry splits itself into four divisions: Consumer Packaging International, Consumer Packaging North America, HH&S and Engineered Materials.
HH&S had sales of $657 million in the most recent fiscal quarter, the lowest of the four segments. International consumer packaging was at $1.04 billion, North America packaging was at $798 million and Engineered Materials was at $738 million.
HH&S sales in the quarter fell by $138 million, or 17 percent, compared with $795 million for the third quarter of fiscal year 2022.
The company, in a presentation for third-quarter results, blamed lower sales on "pass-through of lower resin prices and ongoing inventory destocking along with softer demand inside many of our specialties markets such as filtration and building and construction markets."
Berry makes a wide variety of products through the HH&S division, including nonwovens, specialty films and tapes. End markets include hygiene, consumer, construction and industrial markets. Products made from nonwovens include medical gowns, diapers and feminine care products.
Sales for all of fiscal year 2022 for HH&S totaled $3.17 billion, or 22 percent of company sales.
The roots of the HH&S division date back to Berry's 2015 acquisition of nonwovens company Avintiv Inc. for $2.5 billion. Just weeks after that purchase, the company created three business units, including HH&S to house the Avintiv business along with Berry's flexible packaging, personal care and medical product lines, Berry said at the time.
Other divisions formed at the time were Engineered Materials and Consumer Packaging, which was later split into international and North America units after Berry purchased RPC Group plc, a packaging maker with about 150 plants internationally with a concentration in Europe.
News of the potential sale comes less than a month after the company refused to comment on news reports on the possibility of the sale of the nonwovens business. "We are not able to provide further information as Berry does not comment on speculation," the company said at the time.
Berry indicated there is no time frame for deciding and there is no assurance any move actually will take place.
And as for further comment or updates as the process continues, don't expect any. "Berry does not intend to make further announcements regarding the review of strategic alternatives unless and until the board approves a specific transaction or otherwise determines further disclosure is appropriate or necessary," the company said.
Berry earlier this year indicated plans to close 15 plants and later increased that number to 20 as the company looks to lower costs. While indicating the number of plants closing, the company has declined to provide a full list of impact locations.
Citigroup Global Markets Inc. and Wells Fargo Securities LLC were hired as financial advisers and Bryan Cave Leighton Paisner LLP will be the law firm involved in the process, Berry said.
"An ongoing objective of the Berry board is to constantly look for ways to drive long-term value for our stakeholders, which includes continuously evaluating our portfolio to ensure the company is best positioned to execute on its strategic objectives," Salmon said in his statement.