Essity Reviews $1.7 Billion Stake in Chinese Tissue Brand Vinda

Essity AB, the maker of Plenty paper towels, is starting a strategic review of its $1.6 billion majority stake in Hong Kong-listed tissue maker Vinda International Holding Ltd.

(Bloomberg) — Essity AB, the maker of Plenty paper towels, is starting a strategic review of its $1.6 billion majority stake in Hong Kong-listed tissue maker Vinda International Holding Ltd.

The Swedish personal care products maker is exploring different options for its 52% holding in Vinda as well as its European private label consumer tissue business, it said in a statement Wednesday, confirming an earlier Bloomberg News report. The process may result in divestments, though no such decisions have yet been made, according to the statement.

Essity is aiming to reduce the proportion of sales it gets from the consumer tissue market, it said. Essity’s B shares fell nearly 2% on Wednesday, their largest decline in over a month, giving the firm a market value of $20.6 billion.

Vinda, founded in 1985, owns one of China’s top tissue brands and also sells products under the Tempo and Tork brands. It also makes products for feminine care, baby care and incontinence.

The company has 13 production bases across mainland China, Taiwan and Malaysia, its website shows. Shares of Vinda slumped as much as 11% on Thursday, their biggest fall since September, after the company reported a decline in net income of 88% in the first quarter from a year ago. The firm has a market value of about $3 billion, valuing Essity’s stake at around $1.6 billion.

Essity’s products include Cushelle and Velvet toilet paper and Plenty paper towels, according to its website. The company traces its roots to 1929 with the founding of Swedish forest company SCA, and was renamed Essity after acquiring medical solutions company BSN Medical and separating from its paper and pulp operations.

–With assistance from Charles Daly.

(Updates with Essity and Vinda shares in third and fifth paragraphs respectively.)

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